Cabral 2011 PDF

An Information Model for Lean, Agile, Resilient and
Green Supply Chain Management
Izunildo Fernandes Cabral
Dissertação para a obtenção de Grau de Mestre em Engenharia e Gestão

Industrial
Orientador: Professor Doutor António Bárbara Grilo
Composição do Júri:
Presidente: Professor Doutor Virgílio Cruz Machado
Vogais: Professor Doutor Henrique da Rocha O‘Neill; Professor Doutor António Bárbara Grilo
Setembro 2011
An Information Model for Lean, Agile, Resilient and Green Supply Chain
Management
A Faculdade de Ciências e Tecnologia e a Universidade Nova de Lisboa têm o direito, perpétuo

e sem limitações geográficos, de arquivar e publicar esta dissertação através de exemplares
impressos reproduzidos em papel ou de forma digital, ou por qualquer outro meio conhecido ou
que venha a ser inventado, e de a divulgar através de repositórios científicos e de admitir a sua
cópia e distribuição com objectivos educacionais ou de investigação, não comerciais, desde
que seja dado crédito ao autor e editor.
To my Mother Serafina Fernandes and my Sister Mª Helena Cabral …
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Acknowledgments
To Professor Doctor Antonio Grilo, my supervisor, for the availability, encouragement,
discussion, for all the support, idea, suggestion and text review that contributed to the success
of this dissertation.
To Professor Doctor, Virgílio António Cruz Machado, responsible for the Project LARG SCM, for
all discussion and idea that contributed to the success of this research.
To the Fundação para a Ciência e Tecnologia, for funding this research work
To Ana Balugas, Filipe Grilo and Pedro Campos, professionals of Autoeuropa VW, for their
availability to respond the questionnaires and many contributions that supported the validation
of the case study.
To master Helena Carvalho and Susana Duarte, Professor Rogério Puga Leal, Professora
Virginia Machado and Professora Susana Azevedo for all their contribution in validating the
study developed in this research.
To all my laboratory colleagues for their help and encouragement always manifested.
Finally, I thank everyone, family, friends and colleagues for their encouragement and incentives
that directly or indirectly contributed to the elaboration of this thesis.
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Resumo
Em ambientes empresariais modernos, uma eficaz Gestão da Cadeia de Abastecimento (SCM)
é crucial para a continuidade dos negócios. Neste contexto, Lean, Agile, Resilient e Green
(LARG) são identificados como paradigmas fundamentais para a competitividade da Cadeia de
Abastecimento como um todo. De facto, a competição entre cadeias de abastecimento tem
substituído a tradicional competição entre empresas. Para fazer uma Cadeia de Abastecimento
mais competitiva, capaz de responder aos pedidos dos clientes com agilidade, capaz de
responder de forma eficaz aos distúrbios inesperados, em conjugação com responsabilidades
ambientais, e a necessidade de eliminar processos que não acrescentam valor, as empresas
devem implementar um conjunto de práticas de Gestão da Cadeia de Abastecimento LARG e
Indicadores-chave de desempenho para medir as suas influências sobre o desempenho da
Cadeia de Abastecimento. No entanto, a selecção das melhores práticas LARG e indicadores-
chave de desempenho é um problema de tomada de decisões complexo, envolvendo
dependências e feedbacks. Por outro lado, qualquer tomada de decisão precisa ser apoiado
por dados reais e transparentes. Por isso, esta dissertação pretende apresentar dois modelos
integrados para auxiliar a gestão da informação e a tomada de decisão. O primeiro é um
modelo de informação para apoiar uma Gestão de Cadeia de abastecimento LARG, permitindo
a troca e armazenamento de dados/informação através de uma única plataforma de
informação. Neste modelo três tipos de diagramas são desenvolvidos, Diagrama de Processos
de Negócio, Diagramas de Casos de Uso e Diagramas de Classe para apoiar a modelação da
plataforma de informação. O segundo é um modelo de tomada de decisão, designado ―LARG
Analytical Network Process (ANP)‖ para seleccionar as melhores práticas/indicadores-chaves
desempenho de gestão de cadeia de abastecimento LARG a serem implementados nas
cadeias de abastecimento. Ambos os modelos são desenvolvidos e validados numa cadeia de
abastecimento automóvel, nomeadamente a Volkswagen Autoeuropa.
Palavras-chave: Lean, Agile, Resilient, Green, Supply Chain Management, Information Model
ANP Model, Key Performance Indicators, automotive
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Abstract
In modern business environments, an effective Supply Chain Management (SCM) is
crucial to business continuity. In this context, Lean, Agile, Resilient and Green (LARG),
are advocated as the fundamental paradigm for a competitive Supply Chain (SC) as a
whole. In fact, competition between supply chains (SC) has replaced the traditional
competition between companies. To make a supply chain more competitive, capable
of responding to the demands of customers with agility, and capable of responding
effectively to unexpected disturbance, in conjugation with environmental
responsibilities, and the necessity to eliminate processes that add no value, companies
must implement a set of LARG SCM practices and Key Performance Indicators (KPI) to
measure their influence on the SC performance. However, the selection of the best
LARG SCM practices and KPIs is a complex decision-making problem, involving
dependencies and feedbacks. Still, any decision-making must be supported by real and
transparent data. This dissertation intends to provide two integrated models to assist
the information management and decision-making. The first is an information model to
support a LARG SCM, allowing the exchange and storage of data/information through
a single information platform. In this model three types of diagrams are developed,
Business Process Diagram (BPD), Use Cases Diagram and Class Diagram to assist
the information platform design. The second is a decision-making model, designated
LARG Analytical Network Process (ANP) to select the best LARG SCM practices/KPI
to be implemented in SCs. Both models are developed and validated within the
automotive SC, namely in Volkswagen Autoeuropa.
Keywords: Lean, Agile, Resilient, Green, Supply Chain Management, Information Model, ANP
Model, Key Performance Indicators, automotive
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Index
ACKNOWLEDGMENTS ......................................................................................................... IV
RESUMO ................................................................................................................................... VI
ABSTRACT ............................................................................................................................ VIII
INDEX.......................................................................................................................................... X
LIST OF FIGURES................................................................................................................. XII
LIST OF TABLES ................................................................................................................. XIV
LIST OF ABREVIATIONS ................................................................................................... XVI
LIST OF SYMBOLS............................................................................................................... XX
CHAPTER 1 INTRODUCTION ............................................................................................ 1
1.1 CONTEXT ....................................................................................................................... 1
1.2 OBJECTIVES ................................................................................................................... 2
1.3 RESEARCH METHODOLOGY .......................................................................................... 2
1.4 RESEARCH CONTRIBUTION OF THIS DISSERTATION ....................................................... 5
1.5 STRUCTURE OF THE DISSERTATION ............................................................................... 5
CHAPTER 2 SUPPLY CHAIN MANAGEMENT (SCM) .................................................. 7
2.1 SCM CHARACTERIZATION ON LEAN, AGILE, RESILIENT AND GREEN .......................... 8
2.1.1 The Lean Paradigm ............................................................................................... 8
2.1.2 The Agile Paradigm .............................................................................................. 9
2.1.3 The Resilient Paradigm ....................................................................................... 10
2.1.4 The Green Paradigm ........................................................................................... 11
2.1.5 Lean, agile, resilient and green paradigms comparison ..................................... 12
2.2 LEAN, AGILE, RESILIENT AND GREEN SCM PRACTICES............................................. 14
2.2.1 Lean practices ..................................................................................................... 14
2.2.2 Agile practices ..................................................................................................... 15
2.2.3 Resilient practices ............................................................................................... 16
2.2.4 Green practices ................................................................................................... 16
2.3 LEAN, AGILE, RESILIENT AND GREEN SCM PERFORMANCE MEASUREMENT ............ 17
2.4 LARG SUPPLY CHAIN MANAGEMENT PRACTICES VS. PERFORMANCE ...................... 18
2.5 SUPPLY CHAIN CHARACTERISTICS.............................................................................. 19
CHAPTER 3 MODELS FOR DECISION MAKING......................................................... 23
3.1 ANALYTICAL HIERARCHY PROCESS (AHP) ................................................................ 24
3.1.1 AHP methodology ............................................................................................... 25
3.1.2 The Fundamental Scale ....................................................................................... 26
3.2 ANALYTICAL NETWORK PROCESS (ANP) ................................................................... 28
3.2.1 Outline of Steps of the ANP ................................................................................. 30
3.3 ADDITIONAL CONSIDERATIONS OF AHP AND ANP .................................................... 32
3.4 FUZZY SET THEORY ..................................................................................................... 33
3.5 FUZZY AHP ................................................................................................................. 35
3.6 FUZZY ANP ................................................................................................................. 35
CHAPTER 4 INFORMATION SYSTEM MODELING TECHNIQUES ......................... 37
4.1 INFORMATION SHARING .............................................................................................. 37
4.2 BUSINESS PROCESS MODELING LANGUAGES ............................................................. 38
4.2.1 What is a Business Process ................................................................................. 38
4.2.2 Why Business Processes ...................................................................................... 38
4.2.3 Business Process Modeling Notation (BPMN).................................................... 39
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4.2.4 Business Process Diagram (BPD) ...................................................................... 42
4.3 UNIFIED MODELING LANGUAGE (UML)..................................................................... 45
4.3.1 Software systems modeling.................................................................................. 46
4.3.2 Use cases and Use cases Diagram ...................................................................... 47
4.3.3 Class Diagram..................................................................................................... 50
CHAPTER 5 LARG INFORMATION SYSTEM MODELS............................................. 57
5.1 METHODOLOGY ........................................................................................................... 57
5.2 THE BUSINESS PROCESS DIAGRAM (BPD) .................................................................. 59
5.2.1 The proposed automotive SC BPD framework.................................................... 59
5.3 LARG USE CASES DIAGRAMS .................................................................................... 64
5.3.1 Identification of the actors of the system ............................................................. 64
5.3.2 Use cases diagrams proposed ............................................................................. 65
5.4 THE LEAN, AGILE, RESILIENT, AND GREEN CLASS DIAGRAM .................................... 77
5.4.1 Core Lean, Agile, Resilient, and Green classes and attributes ........................... 80
5.5 CONTRIBUTION OF INFORMATION MODELING TO IMPROVE LARG SCM
PERFORMANCE ........................................................................................................................ 82
CHAPTER 6 LARG ANP: A PROPOSED CONCEPTUAL MODEL ........................... 85
6.1 WHY ANP? .................................................................................................................. 85
6.2 LARG ANP METHODOLOGY ...................................................................................... 86
6.2.1 Application of LARG ANP methodology ............................................................. 87
CHAPTER 7 CASE STUDY: AUTOEUROPA VW ......................................................... 91
7.1 VOLKSWAGEN GROUP ................................................................................................. 91
7.2 VOLKSWAGEN AUTOEUROPA ...................................................................................... 91
7.2.1 Data gathering for the model .............................................................................. 91
7.2.2 Pairwise comparison matrices between the elements and related weights ......... 92
7.2.3 Supermatrix formulation and analysis .............................................................. 103
7.2.4 LARG ANP model final priorities ..................................................................... 104
7.2.5 Discussion of the results of the LARG ANP model............................................ 105
7.2.6 Advantages and limitations of LARG ANP model ............................................. 106
CHAPTER 8 CONCLUSIONS AND RECOMMENDED FUTURE WORK ............... 109
REFERENCES ....................................................................................................................... 111
ANNEX ..................................................................................................................................... 121
ANNEX 1 LIST OF PREVIOUS LARG PRACTICES IDENTIFIED ................................................. 121
Annex 1.1 List of Lean practices ....................................................................................... 121
Annex 1.2 List of Agile practices ....................................................................................... 123
Annex 1.3 List of Resilient practices ................................................................................. 124
Annex 1.4 List of Green practices ..................................................................................... 125
ANNEX 2 EXAMPLES OF QUESTIONNAIRES USED IN GATHERING DATA ................................ 127
Annex 2.1 Questionnaire of pairwise comparison of Criteria elements (enablers) according
to SC competitiveness ........................................................................................................ 127
Annex 2.2 Questionnaire of pairwise comparison of LARG practices according to
paradigms .......................................................................................................................... 131
Annex 2.3 Questionnaire of pairwise comparison of LARG practices according to Focal
firm .................................................................................................................................... 137
Annex 2.4 Questionnaire of pairwise comparison of paradigms (Lean, Agile, Resilient, and
Green) according to Focal firm ........................................................................................ 139
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List of Figures
Figure 1.1 Research methodology. ............................................................................... 4
Figure 2.1 Green supply chain. ................................................................................... 12
Figure 2.2 – Performance indicators and management characteristics relationships... 20
Figure 3.1 – The AHP model for the selection of the Democratic Nominee. ................ 28
Figure 3.2 Comparison of a hierarchy with a network.................................................. 29
Figure 3.3 - An example of ANP model ....................................................................... 30
Figure 4.1 – A private business process using BPMN notations. ................................ 41
Figure 4.2 – The abstract public purchasing process. ................................................. 41
Figure 4.3 – The collaboration process. ...................................................................... 41
Figure 4.4 – Business process diagrams core elements. ............................................ 43
Figure 4.5 – core set BPMN elements ........................................................................ 45
Figure 4.6 – Three complementary views or sets of UML diagrams. ........................... 45
Figure 4.7 Checkland‘s seven-stage soft systems methodology. ................................ 46
Figure 4.8 Elements of a use case diagram. ............................................................... 48
Figure 4.9 Example of use case diagram and their relationships. ............................... 50
Figure 4.10 Elements of class diagrams. .................................................................. 52
Figure 4.11 How to represent an association relationship in UML. .............................. 52
Figure 4.12 How to represent an aggregation relationship in UML. ............................. 52
Figure 4.13 How to represent a composition relationship in UML. ............................. 53
Figure 4.14 How to represent a generalization relationship in UML. .......................... 53
Figure 4.15 Class diagram example............................................................................ 54
Figure 5.1 Methodology for LARG information system design. .................................... 58
Figure 5.2 SC‘s entities of study. ................................................................................ 60
Figure 5.3 Global automotive SC Business Process Diagram developed. ................... 61
Figure 5.4 Stretch of the conceptual BPD developed. ................................................. 63
Figure 5.5 Use cases diagram to registry, login and logout. ........................................ 65
Figure 5.6 Use cases diagram to calculate the degree of resilience in the chain. ........ 66
Figure 5.7 Use cases diagram to calculate the number of stop line in a given period. . 67
Figure 5.8 Use cases diagram to calculate the quantity of recycled in the SC. ............ 67
Figure 5.9 Use cases diagram to calculate the number of order fulfilled in time. ......... 68
Figure 5.10 Use cases diagram to calculate the LARG performance of a supplier or
focal firm. ............................................................................................................. 69
Figure 5.11 Use cases to evaluate the SC performance. ............................................ 70
5.12 Use case diagram to check supplier‘s inventory level. ........................................ 71
Figure 5.13 Use case diagram to check order status. ................................................. 71
Figure 5.14 Use case diagram to manage entity/order info. ........................................ 72
Figure 5.15 Use case diagram to calculate the average inventory level in the SC. ...... 73
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Figure 5.16 Use case diagram to estimate how lean/agile/resilient/green is the
entity/SC. ............................................................................................................. 73
Figure 5.17 Use case diagram to calculate the LARG SC performance. ..................... 74
Figure 5.18 Use case diagram to evaluate a supplier.................................................. 75
Figure 5.19 The Conceptual Class Diagram ............................................................... 79
Figure 6.1 Various steps in LARG ANP model ............................................................ 86
Figure 6.2 ANP model to select LARG best SCM practices. ....................................... 87
Figure 7.1 Priorities for criteria comparison with respect to ―Goal‖, obtained on Super
Decision. .............................................................................................................. 97
Figure 7.2 Cluster matrix. .......................................................................................... 103
Figure 7.3 Unweighted supermatrix. ......................................................................... 104
Figure 7.4 Weighted supermatrix. ............................................................................. 104
Figure 7.5 Limit matrix. ............................................................................................. 104
Figure 7.6 Experimental final priorities for LARG ANP model. ................................... 105
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List of Tables
Table 2.1 Lean, agile, Resilient, and Green paradigms comparison ........................... 13
Table 2.2 Lean SCM practices. ................................................................................... 15
Table 2.3 Agile SCM practices. ................................................................................... 15
Table 2.4 Resilient SCM practices. ............................................................................. 16
Table 2.5 Green SCM practices. ................................................................................. 16
Table 2.6 Supply chain performance measures. ......................................................... 17
Table 2.7 LARG SCM practices influence on manufacturing supply chain performance.
............................................................................................................................ 19
Table 2.8 Paradigms synergies and divergences overview . ....................................... 21
Table 3.1 The Fundamental Scale of Absolute Numbers. ........................................... 26
3.2 Some applications of AHP/ANP ............................................................................ 33
3.3 Some applications of Fuzzy AHP. ......................................................................... 35
3.4 Some applications of Fuzzy ANP. ......................................................................... 36
Table 4.1 Elements of a BPD. ..................................................................................... 43
Table 4.2 – General components of a root definition. .................................................. 47
Table 5.1 Use cases diagram resume. ........................................................................ 76
Table 7.1 Overall information of elements pairwise comparison. ................................. 93
Table 7.2 Overall information of clusters pairwise comparison. ................................... 94
Table 7.3 Criteria pairwise comparison with respect to Goal. ...................................... 94
Table 7.4 Random consistency index. ........................................................................ 95
Table 7.5 Normalized criteria pairwise comparison matrix with respect to the goal. .... 95
Table 7.6 Weighted criteria matrix and consistency vector. ......................................... 96
Table 7.7 LARG KPIs pairwise comparison matrix with respect to cost. ...................... 97
Table 7.8 LARG KPIs ranking with respect to each criteria. ........................................ 97
Table 7.9 LARG KPIs pairwise comparison matrix with respect to focal firm. .............. 98
Table 7.10 LARG KPIs ranking according to each paradigm. ...................................... 98
Table 7.11 LARG KPIs ranking with respect to each practice. .................................... 99
Table 7.12 LARG practices pairwise comparison with respect to focal firm. ................ 99
Table 7.13 LARG practices ranking with respect to each KPI. .................................. 100
Table 7.14 LARG practices ranking with respect to each criteria............................... 100
Table 7.15 LARG practices ranking with respect to each paradigm. ......................... 101
Table 7.16 LARG paradigms pairwise comparison with respect to focal firm. ........... 101
Table 7.17 Criteria ranking of pairwise comparison with respect to each criteria. ...... 102
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List of Abreviations
SCM Supply Chain Management
LARG Lean, Agile, Resilient, and Green
ANP Analytical Network Process
SC Supply Chain
LARG SCM Lean, Agile, Resilient, and Green Supply Chain Management
LARG SC Lean, Agile, Resilient, and Green Supply Chain
KPI Key Performance Indicators
BPD Business Process Diagram
LARG ANP Lean, Agile, Resilient, and Green Analytical Network Process
MIT Massachusetts Institute of Technology
Pt Portugal
EDAM Engineering Design and Advanced Manufacturing
IT Information Technology
BPMN Business Process Modeling Notation
UML Unified Modeling Language
LARG KPI Lean, Agile, Resilient, and Green Key Performance Indicators
VW Volkswagen
LM Lean Manufacturing
NVA Non-Value Added
VA Value Added
TPS Toyota Production System

JIT Just in Time
FMS Flexible Manufacturing Systems
GSCM Green Supply Chain Management
TQM Total Quality Management
JIS Just in Sequence
ISO International Organization for Standardization
R&D Research and Development
AHP Analytical Hierarchy Process
MCDM Multi-criteria Decision Making
IBM International Business Machines
WSM Weighted Sum Model
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WPM Weighted Product Model
ELECTRE ELimination Et Choix Traduisant la REalité
TOPSIS Technique for Order Preference by Similarity to Ideal Solution
FAHP Fuzzy Analytical Hierarchy Process
RFID Radio Frequency Identification
FANP Fuzzy Analytical Network Process
OMG Object Management Group
BPM Business Process Model
PO Purchasing Order
RFQ Request For Quotation
OOSE Object-Oriented Software Engineering
E-R Entity-Relationship
CD Compact Disc
TV Television
SC BPD Supply Chain Business Process Diagram
EOQ Economic Order Quantity
FG Finished Goods
TPM Total Productive Maintenance
UCD Use Cases Diagram
ID Identifier
SE Super Entity
FF Focal Firm
LARG UCD Lea, Agile, Resilient and Green Use Cases Diagram
LARG SC Lea, Agile, Resilient and Green Supply Chains
IS Information System
G Goal
C Cost
SL Service Level
T Time
QofP Quality of Product
L Lean
A Agile
R Resilient
G Green
rst
1tS 1 tier Suppliers
rst
1tD 1 tier Distributors
P Practice
RIW Relative Importance Weight
PWC Pairwise Comparison
CR Consistency Ratio
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CI Consistency Index
RI Random Consistency Index
IC Inventory Cost
OFR Order fulfillment Rate
RUD Responsiveness to Urgent Deliveries
NC No Comparison
SS Strategic Stock
SRR System for Rapid Response
RMP Reuse Materials and Packages
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List of symbols
ω Eigenvalue vector
λmax Maximum eigenvalue
n Number of elements
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Chapter 1 Introduction
1.1 Context
In recent years, the area of supply chain management (SCM) has become very popular. This is
evidenced by market increases in practitioner and academic publications, conferences,
professional development programs and university courses in the area (Burgess, Singh, &
Koroglu, 2006). Within today‘s manufacturing circle, there is a rapid revolution due to many
reasons, ranging from customer oriented products, shortening product life cycles, stakeholder
requirements, local and international regulatory compliances, to competitions amongst players
within industry (Olugu, Wong, & Shaharoun, 2010). The global market has imposed that
competitiveness improvement requires collaborative work and partnerships across supply
chains, motivating companies to make better decision to improve the Supply Chain (SC)
performance. Collaboration between organizations, supported by flawless communication
between their systems and applications, has been identified as key factors for enterprise
success on a continuously changing global environment, enabling the companies to enforce
their partnership and strengthen their business in the market (Jardim-Goncalves, Grilo, &
Steiger-Garcao, 2006).
Organizations are looking for new methods of work and business relationships, and the
exchange of information and documents with partners is often incapable of being executed
automatically and in electronic format. This is mainly due to problems of incompatibility in the
information representation and in the software application methods adopted (Jardim-Goncalves
et al., 2006). From a Supply Chain Management point of view, any company should not work in
isolation, but must collaborate with others entities in the chain to compete with other chains. So,
if there is a platform that supports that exchange, it will be easier for enterprises to share
data/information, allowing increasing the competitiveness of the supply chain and making timely
decisions (Cabral, Grilo, Puga-Leal, & Cruz-Machado, 2011). But, having an information
platform and a collaborative supply chain is not itself sufficient to meet the markets
requirements.
Is thus an issue clearly the development of strategies to implement and evaluate scenarios for
increasing the competitiveness of the supply chain and to assist decision-making in different
management paradigms. Lean, Agile, Resilient and Green (LARG) paradigms are identified as
the key paradigms to survive in the global market competition. The current challenge is to make
the supply chain more competitive, capable of responding to unexpected disruptions (Resilient),
responding quickly to changes in demands of customers in a market increasingly volatile and
turbulent with agility (Agile), in conjugation with environmental responsibilities (Green),
necessity to reduce cost, eliminate processes that add no value (Lean).
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1.2 Objectives
The aim of this dissertation is to develop two models to support a Lean, Agile, Resilient, and
Green SCM (LARG SCM). The first objective is a LARG information model that will support the
creation of a LARG platform, which will support data/information exchange between all the
companies in the considered supply chain. The second objective is to develop a decision
making model that will assist managers in selecting the best practices, KPIs, and paradigms in
different situations, in LARG context.
Those objectives are developed through literature review and case study development in
automotive Supply Chain, using interviews and questionnaires with experts in automotive
industry. The first objective (LARG information model) is achieved through the creation of three
diagrams: Business Process Diagram (BPD); Use Cases Diagram; and Class Diagram. The
BPD is developed to model core business processes, material, information, and financial flows
of each entity in the supply chain. Use Cases diagrams are to represent the interaction between
users and platform system. With the Class Diagram, is intended to show the static view of the
system and the information to be stored.
The second objective (LARG ANP Model) is reached by developing an Analytical Network
Process (ANP) that allows selecting the best factor (practices, KPIs, paradigms, enablers), by
prioritizing all of them. To this purpose a set of clusters/elements are identified to compose the
model and pairwise compared with respect to a given factor.
1.3 Research Methodology
This scientific research is part of the MIT Project, designated Lean, Agile, Resilient, and Green
Supply Chain Management funded by Fundação para a Ciência e a Tecnologia da Faculdade
de Ciências e Tecnologia (MIT-Pt/EDAM-IASC/0033/2008). The project has eleven tasks and
each task can utilize the work of others. Namely in this task (six) designated ―LARG SCM
Information System‖, there are many contributions of previous tasks (task four – Metrics for
Lean, Agile, Resilient, and Green SCM; task three - Assessment of Lean, Agile, Resileint, and
Green SCM implementation practices; task two – Lean, Agile; Resilient, and Green paradigms
attributes; task one – SCM characterization on Lean, Agile, Resilient, and Green).
The methodology employed to guide this research is summarized in Fig. 1. 1. To achieve the
objectives proposed in the previous point an extensive literature review is made on Lean, Agile,
Resilient, and Green Supply Chain Management, techniques for information system modeling
and models for decision making. Much of the literature reviews are part of the work published in
ambit of same project. With the literature review, is intended to get answers for the following
questions: what is the context of each paradigm (Lean, Agile, Resilient, and Green); which are
the characteristics of each paradigm in context of automobile SC; which are the core LARG
practices that can be implemented in each level of the chain; which are the proposed LARG Key
2
Performance Indicators (KPIs) to measures the influences of LARG practices implementation;

which are LARG SCM attributes; which are the models for decision making in SCM context.
As shown in Fig. 1.1, firstly a literature review on lean, agile, resilient, and green SCM (LARG
SCM) is done. In this stage, the aim is to understand the concept of each paradigm and finding
the potential tradeoffs and divergences between them and identify a set of LARG SCM
practices and possible KPIs to evaluate the influence of practices implementation on SC
performance. The practices and KPIs are connected directly to each SC level (distributors, focal
firm, suppliers). Then, is identified the most appropriate diagrams to assist the information
model development. This model development is supported by two standard language used in IT
modeling fields, Business Process Notation Modeling (BPMN) and Unified Modeling Language
(UML). Literature review is made in this stage to understand the potentiality of each
language/diagram. In LARG information model development a Business Process Diagram is
modeled to give a global vision of the material, information and financial flows of the automotive
SC considered. Firstly, were created a BPD general, with contributions of a team of experts of
the referred project, and in second stage was adapted to an automobile chain, with
contributions of experts in automobile industry, namely professionals in logistics that work in
focal firm. The same procedures are followed in use cases diagram and class diagram
development.
Based on BPD developed, it will be possible to identify the core data/information associated to
each organization/department and process that will be represented in class diagram. All
data/information stored on structural component of LARG platform (class diagram) will be very
important to assist the managers in decision making. The LARG platform will serve as support
for decision making in ANP model, i.e., looking to a given KPI (metrics) value, is decided which
practice should be implemented to improve these value.
Before development of the ANP model, a literature review was conducted to contribute to build
a model to assist decision making in LARG context. In this stage is identified the
clusters/elements to represent the ANP model.
Based on data collection in automobile industry and contributions of a team of experts, are
eliminated the practices that are not implemented in automotive SC and is selected a set of
implemented practices for making pairwise comparisons according to other factors (enablers,
KPIs, paradigms, stakeholders), to validate the LARG ANP model. At the same time, is selected
a set of KPIs to be pairwise compared according to other factors (practices, paradigms,
stakeholders, enablers). To make pairwise comparisons between clusters/elements of ANP
model, some questionnaires were made in the logistics department of a focal firm (Autoeuropa).
The questionnaires were directed to the responsible of logistics department.
The BPD is developed using the ActiveModeler Avantage software, and the design of UML
diagrams (use cases and class diagram) are done using the Argo UML software. Finally, the
ANP model is implemented by the Super Decisions and Excel.
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Literature review on Lean, Agile, Resilient and Green SCM
- SCM characterization on Lean, Agile, Resilient and Green (understand LARG SCM context)
- Identification of LARG practices and KPIs (performance)
- Identification of LARG attributes (to class diagram development)
- SCM characteristics
Literature review on techniques for information system modeling

- Select and study the techniques
- Understand the linking between the techniques
Literature review on models for decision making

- Select and study the models
- Understand the application of each model
Selection and linking of practices and KPIs

- Selection of LARG SCM practices in automotive industry context
- Selection of LARG KPIs to evaluate LARG SCM practices implementation
- Connect LARG practices and KPIs to each entity (level of the chain)
- Identification and selection of macro indicators (enablers)
LARG Information system modeling

- Mapping automotive SC Business Processes Diagram - BPD (using BPMN)
- Use cases and use cases diagram development (using UML)
- LARG class diagram development (using UML)
Development of ANP model to select best LARG practices and KPIs

- Identification of clusters/elements to represent the model
- ANP conceptual model (linking between clusters/elements)
- Questionnaires/interviews to eliminate no implemented LARG practices and no used KPIs
- Questionnaires to make pairwise comparisons between clusters/elements
- Data collection (in Autoeuropa VW)
- Data processing and analysis of results
Figure 1.1 Research methodology.
4
1.4 Research contribution of this dissertation

Firstly this dissertation intends to review the existing research on LARG
SCM, namely characteristics, attributes, practices, performance indicators and existing models.
That literature reviews aims to support the LARG SCM information system development and
ANP model. This dissertation has also carried out a review of major LARG SCM practices and
KPIs and finding the potential relationships between the practices and the KPIs, situation where
the implementation of a practice can improve the value of a given KPI.
The key research contribution of this dissertation is the introduction of an information system
model to assist SC managers on decision-making. Three types of diagrams have been
developed in this research to support an LARG platform system that will improves the exchange
of information between all actors in the SC. Information sharing through this proposed platform
system is crucial for effective SCM, mainly in SCs as automobile where the frequency of
information exchange should be very high. The business process diagram developed
represents a powerful toll to understand the link of processes in different level of the chain or
inside the organizations, processes to be improved, points where interoperability problems
exist, and fundamentally data/information associated to each organization/department and
process. The uses cases developed have an important contribution in this research since they
represent all system requirements, i.e., the potential interactions between the users (agents of
considered SC) and the system. The importance of class diagram is that allows storing all
data/information required to a LARG SCM.
Other interesting contribution of this research is the introduction of a fictional ―super entity‖ that
is responsible for managing the chain as a whole. This ―super entity‖ is an external entity that
seeks SC competitiveness by improving SC performance as a whole. The main function of this
―super entity‖ is to make SC entities working in collaboration to achieve a unique result: SC
competitiveness.
Another key contribution of this thesis is that offer an ANP model to support the decision-
making, on selecting the best practices to be implemented in the automotive SC. This model,
also allows testing other scenarios as select the best KPI to measures performance of a given
entity, enabler most appropriate to achieve competitiveness and the paradigm more suitable to
a given entity or supply chain. This model is very flexible since allows managers to prioritize the
best factor according to other given factor.
1.5 Structure of the dissertation

The dissertation is organized in 7 chapters. This first chapter does a brief introduction, namely
as regards the scope of study, objectives, methodology, and contribution of this research.
Chapter 2 does a literature review on Lean, Agile, Resilient and Green Supply Chain
Management, characteristics, attributes, practices and KPIs.
5
Chapter 3 and 4 are also a literature review. In chapter 3 a brief description of models for
decision-making is done, and in chapter 4 is described the techniques to model the business
process and information system.
Chapter 5 presents the diagrams developed to assist LARG information system modeling,
namely: Business Process Diagram (BPD), use cases and class diagram.
Chapter 6 applies the developed model to select the LARG SCM best practices.
In chapter 7 a case study in automobile SC is presented to show the results of ANP model.
The conclusions and a critical analysis of the results obtained are presented in chapter 8.
Future research work is also suggested to develop as a result of the study now presented.
Finally the thesis ends with the bibliography used in literature review and annexes. The annex is
about the questionnaires used to do data gathering in chapter 7.
6
Chapter 2 Supply Chain Management (SCM)

Supply chains encompass the companies and the business activities needed to design, make,
deliver, and use a product or service (Hugos, 2006). Businesses depend on their supply chains
to provide them with what they need to survive and thrive. Every business fits into one or more
supply chains and has a role to play in each of them (Hugos, 2006).
According to (Stevens, 1989), a Supply Chain (SC) can be described as a chain that links
various agents, from the customer to the supplier, through manufacturing and services so that
the flow of materials, money and information can be effectively managed to meet the business
requirements. A supply chain, in other words, extends from the original supplier or source to the
ultimate customer (Blanchard, 2010). There are basically three types of flows in a SC: material
flow (direct flow and reverse flow), information flow and financial flow. Currently there is the
assumption that SC‘s compete instead of other SC‘s (Martin Christopher & Towill, 2000). So,
the competitiveness or failure of supply chains is determined by the way that the entities
manage and integrate their process. It is in this context that the term Supply Chain Management
(SCM) appears. Then, what is Supply Chain Management? According to (Hugos, 2006), the
SCM can be defined as the things that can be done to influence the behavior of the supply
chain and get the desired results. In literature, there are many definitions of SCM. Following is
presented some definitions:
 Hugos M. in his book (Essentials of Supply Chain Management, 2006), refers to SCM
like ―the coordination of production, inventory, location, and transportation among the
participants in a supply chain to achieve the best mix of responsiveness and efficiency
for the market being served‖.
 The systemic, strategic coordination of the traditional business functions and the tactics
across these business functions within a particular company and across businesses
within the supply chain, for the purposes of improving the long-term performance of the
individual companies and the supply chain as a whole (Mentzer et al., 2001).
 Strategic factor for increasing organizational effectiveness and for the better attainment
of organizational goals such as enhanced competitiveness, better customer service
and increased profitability (Gunasekaran, Patel, & Tirtiroglu, 2001).
 Is the set of business processes and resources that transforms a product from raw
materials into finished goods and delivers those goods into the hands of the customer.
Supply chain management (SCM) has been defined as ―the management of upstream
and downstream relationship with suppliers, distributors and customers to achieve
greater customer value-added at less total cost‖ (Wilding, 2003).
All these definitions have many concepts in common: strategic collaboration, business process
management, production and inventory management, value-added for final customer.
7
Often there is some confusion between the concept of SCM and logistics. According to (Hugos,
2006), there is a difference between the concept of supply chain management and the
traditional concept of logistics. According to him, logistics typically refers to activities that occur
within the boundaries of a single organization and supply chain refer to networks of companies
that work together and coordinate their actions to deliver a product to market. Also, traditional
logistics focuses its attention on activities such as procurement, distribution, maintenance, and
inventory management. Supply chain management acknowledges all of traditional logistics and
also includes activities such as marketing, new product development, finance, and customer
service (Hugos, 2006).
And what is the SCM objective? According to (Groznik & Maslaric, 2010), the objective of
supply chain management is to provide a high velocity flow of high quality, relevant information
that enables suppliers to provide for the uninterrupted and precisely timed flow materials to
customers. To (Susana G. Azevedo, Carvalho, & Machado, 2010a), the supply chain objective
is to delivering the right product, in the right quantity, in the right condition, to the right place, at
the right time, for the right cost. Since customer requirements are continuously changing, supply
chains must be adaptable to future changes to respond appropriately to market requirements
and changes.
2.1 SCM characterization on Lean, Agile, Resilient and Green

2.1.1 The Lean Paradigm
Lean Manufacturing (LM), was developed by Taiichi Ohno at Toyota Motor Company in the
1950s (Motwani, 2003). The term ―Lean‖ means a series of activities or solutions to eliminate
waste, reduce Non-Value Added (NVA) operations, and improve the Value Added (VA) process
(S. Wu & Wee, 2009). The word ―Lean‖ or ―Lean production‖ was developed from the Future
Car Investigation by MIT, to interpret Japan‘s new production system, particularly the TPS
(Toyota Production System) in order to distinguish it from mass production (Conti, Angelis,
Cooper, Faragher, & Gill, 2006; MacDuffie & Helper, 1997; Womack, Jones, & Ross, 1991). The
literature offers many definitions of lean philosophy, but all of them share most of the same
principles (Susana G. Azevedo, Carvalho, & Machado, 2010b). According to Womack and
Jones (1991), the lean paradigm is an approach which provides a way to do more with less
(less human effort, less equipment, less time and less space), while coming closer to customer
requirements (Womack et al., 1991).The lean paradigm is a systematic approach to identify and
eliminate all non-value-added activities through continuous improvement (Susana G. Azevedo
et al., 2010b).
According to (Motwani, 2003), LM is an enhancement of mass production. Getting the product

right the first time, continuous improvement efforts, quality in products and processes, flexible
production, and minimizing waste of any kind are the enhancements that produce LM. LM
involves changing and improvement processes, the attack upon the system, i.e., re-engineering
the whole process, so that the common causes are much reduced (Motwani, 2003).
8
The importance of the lean paradigm is highlighted by (Gunasekaran et al., 2001), in the
following affirmation: ―The viability of a firm now largely depends on how well it can respond to
customer requirements while becoming lean‖. The lean approach has essentially focused on the
elimination of waste (Ashish Agarwal, Shankar, & Tiwari, 2007) and responsiveness to change
(Motwani, 2003).
The core content of lean manufacturing lies in Just in Time (JIT), reducing the inner waste of
resources with the smallest investment achieving the biggest output (H. M. Wu, 2009).
2.1.2 The Agile Paradigm
The concept of agile manufacturing was presented in 1991, by the Iaccoca of Lehigh University,
which focus on the ability to respond rapidly to changes in demand, both in terms of volume and
variety. The origins of agility as a business concept lie in Flexible Manufacturing Systems (FMS)
(Fan, Xu, & Gong, 2007). According to (Fan et al., 2007), flexibility is one of the key characters
of an agile organization. This concept can be extended to a supply chain. To (M. Christopher,
2000), business agility embraces organizational structures, information systems, logistics
processes, and, in particular mindsets.
Given the objective of supply chain, the agile supply chain intends to create the ability to
respond rapidly and cost effectively to unpredictable changes in markets and increasing levels
of environmental turbulence, both in terms of volume and variety (Ashish Agarwal et al., 2007).
To (Baramichai, Zimmers, & Marangos, 2007), ―an agile supply chain is an integration of
business partners to enable new competencies in order to respond to rapidly changing,
continually fragmenting markets. The key enablers of the agile supply chain are the dynamics of
structures and relationship configuration, the end-to-end visibility of information, the event-
driven and event-based management‖. According to Christopher (2000), the agile supply chain
characteristic is market sensitive. To him, market sensitive means that the supply chain is
capable of reading and responding to real demand.
Agile manufacturing works well where demand is less predictable and the requirement for
variety is high (M. Christopher, 2000). To (Fan et al., 2007), the aim of the agile supply chain is
to carry inventory as generic as possible (postponement concept).
Since the first introduction (1991), this paradigm has been receiving an increasing attention by
both researchers and industrial communities (Bottani, 2009). Currently accepted definitions
relate agility to the ability of companies to respond quickly and effectively to (unexpected)
changes in market demand (Brown & Bessant, 2003; Fliedner & Vokurka, 1997; Sharifi,
Colquhoun, Barclay, & Dann, 2001), with the aim to meet varied customer requirements, in
terms of price, specification, quality, quantity, and delivery (Prince & Kay, 2003). Agile
enterprises react quickly and effectively to changes markets, driven by customized products and
services (Bottani, 2009). Furthermore, agility directly affects company‘s capability to produce
and deliver new products in a cost-efficient way (Swafford, Ghosh, & Murthy, 2006).
9
Decrease in manufacturing costs, increased customer satisfaction, removal of non-value added

activities and increased competitiveness (Lin, Chiu, & Chu, 2006) are among benefits that can
be achieved through agile strategies. It is recognized as fundamental strategies for survival in
turbulent and volatile markets and to help companies to deliver the right product at the right time
to the customers (Ashish Agarwal et al., 2007; Lin et al., 2006; Yusuf, Sarhadi, & Gunasekaran,
1999).
2.1.3 The Resilient Paradigm
To increase profits margins, many companies develop strategies to seek out low-cost solutions.
This can be a big problem because today‘s marketplace is characterized by higher levels of
turbulence and volatility. According to (S. Azevedo, 2008) the risk to business continuity has
increased as result of supply chain vulnerability to disruption. Today the objective in supply
chain design has to be upon resilience, whereas in the past was cost minimization or service
optimization (Tang, 2006). Resilient supply chains may not be the lowest-cost supply chains but
they are more capable of coping with the uncertain business environment (H. Carvalho &
Machado, 2009).
To (H. Carvalho & Machado, 2009), resilience refers to the ability of the supply chain to cope
with unexpected disturbances. Supply chain resilience is concerned with the system ability to
return to its original state or to a new one, more desirable, after experiencing a disturbance, and
avoiding the occurrence of failure modes. The goal of supply chain resilience analysis and
management is to prevent the shifting to undesirable states, i.e., the ones where failure modes
could occur. In supply chain systems, the objective is to react efficiently to the negative effects
of disturbances (which could be more or less severe) - (H. Carvalho & Machado, 2009).
According to (Haimes, 2006), the aim of resilience strategies has two manifolds:
 To recover the desired values of the states of a system that has been disturbed, within
an acceptable time period and at an acceptable cost;
 To reduce the effectiveness of the disturbance by changing the level of the

effectiveness of a potential threat.
The ability to recover from the disturbance occurrence is related to development of

responsiveness capabilities through flexibility and redundancy (Rice & Federico, 2003).
Flexibility is related to the investments in infrastructure and resources before they actually are
needed. Examples of flexibility are multi-skilled workforce, designing production systems that
can accommodate multiple products and real-time changes (Rice & Federico, 2003).
Redundancy is concerned to maintaining capacity to respond to disruptions in the supply
network, largely through investments in capital and capacity prior to the point of need. Examples
of redundancy include excess of capacity requirements, committing to contracts for material
supply (buying capacity whether it is used or not), and maintaining a dedicated transportation
fleet (Rice & Federico, 2003). These authors differentiated flexibility from redundancy in the
10
following way: redundancy capacity may or may not be used; it is this additional capacity that
would be used to replace the capacity loss caused by a disruption. Flexibility, on the other hand,
entails restructure previously existing capacity. Christopher and Peck (Martin Christopher &
Peck, 2004) have taken care to avoid some of the pitfalls of synonyms; in particular they
distinguish between ―resilience‖ and ―robustness‖. For them, robust mean ―strong or sturdy in
physique or construction‖. Here the emphasis is on physical strength. In IT terminology
―robustness‖ is ―the ability of a computer system to cope with errors during execution‖. A robust
process may be desirable, but does not itself equate to a resilient supply chain. They define
resilience as ―the ability of a system to return to its original state or move to a new, more
desirable after being disturbed.
The ability to avoid the failure modes, after a disturbance occurrence, is vital for the supply
chain success - it is a supply chain resilience property. In this sense, resilience can be a strong
source of competitive advantage. However, resilience is not always desirable; for instance,
systems states that reduce profitability can be highly resilient. The organizations difficulties in
escaping from these undesirable states, even when reengineering programs are implemented,
is emphasized by the relatively low success rate of business process reengineering (Al-Mashari,
Irani, & Zairi, 2001).
2.1.4 The Green Paradigm
The green supply chain management was raised firstly by Manufacturing Research Association
of Michigan State University in 1996, which is added the thought of green manufacturing and
environmental management based on the traditional SCM in order to heighten the utility rate of
resource and energy and reduce the environmental influence which was produced by some
product (Jia & Bai, 2009). Environmentally sustainable green supply chain management has
emerged as organizational philosophy to achieve corporate profit and market share objectives
by reducing environmental risks and impacts while improving ecological efficiency of these
organizations and their partners (Rao & Holt, 2005). Changes in government policies, such as
the Waste Electrical and Electronic Equipment directive in European Union (Barroso &
Machado, 2005) (Gottberg, Morris, Simon, Mark-Herbert, & Cook, 2006), making the industry
responsible for post-consumer disposal of products, forces both manufacturers and researchers
to implement sustainable operations across the supply chain (Zhu, Sarkis, & Lai, 2008). The
increased pressure from community and environmentally conscious consumers had lead to
rigorous environmental regulations, forcing the manufacturers to effectively integrate
environmental concerns into their management practices (Rao & Holt, 2005).
According to (Srivastava, 2007) green SCM is an integrating environmental thinking into SCM,
including product design, material sourcing and selection, manufacturing processes, delivery of
the final product to the customers as well as end-of-life management of the product after its
useful life. The objects of GSCM add the waste handler and logistic agent based on the
traditional SCM which includes material supplier, component supplier, manufacturer, distributor,
11
retailer and customer to form a bidirectional logistic which is based on the reuse, remanufacture
and recycle and to height the utility rate of the resource and emerge and reduce or eliminate the
environmental influence (Wang, Zhang, Liu, Liu, & Zhang, 2005), i.e., suppliers, manufacturers
and customers should work together towards the reduction of environmental impact from
production processes and products (Vachon & Klassen, 2008). The schematic of the material
flow and the echelons involved in a green supply chain is presented in Fig. 2.1. The goals
system of GSCM is consisted of price, quality, cost, service, resource and environment (Guo,
Zhao, & Wang, 2008). The content of GSCM includes green design, green material, green
manufacture, green marketing, green packing, green consumption and green recycle (Denf &
Wang, 2008; Guo et al., 2008; X. Z. Li & Wang, 2008).
Figure 2.1 Green supply chain (Olugu, Wong, & Shaharoun).
According to (Srivastava, 2007), green supply chain management can reduce the ecological
impact of industrial activity without sacrificing quality, cost, reliability, performance or energy
utilization efficiency; meeting environmental regulations to not only minimizing ecological
damage, but also leading to overall economic profit.
2.1.5 Lean, agile, resilient and green paradigms comparison
(H. Carvalho & Machado, 2009), based on literature review, made a comparison of the four
paradigm based on 7 drivers: purpose; manufacturing focus; alliance; organizational structure;
supplier involvement; inventory strategy; lead time and; product design. Table 2.1, presents this
comparison.
12
Table 2.1 Lean, agile, Resilient, and Green paradigms comparison (H. Carvalho & Machado, 2009).
Driver Lean Agile Resilient Green

Focus on cost
System ability to
reduction and Understands
return to its original
flexibility, for customer
state or to a new
already available requirements by Focus on sustainable
one, more desirable,
products, through interfacing with development - the reduction of
Purpose after experiencing a
continuous customers and ecological impact of industrial
disturbance, and
elimination of waste market and being activity
avoiding the
or non-value added adaptable to future
occurrence of
activities across the changes
failures modes
chain
Has the ability to

The emphasis is on
Maintain high respond quickly to Focus on efficiency and waste
flexibility (minimal
average utilization varying customer reduction for environmental
batch sizes and
rate. It uses just in needs (mass benefit and developing of re-
Manufacturing capacity
time practices, customization), it manufacturing capabilities to
focus redundancies), the
―pulling‖ the goods deploys excess integrate
schedule planning is
through the system buffer capacity to reusable/remanufactured
based on shared
based on demand respond to market components
information
requirements
May participate in Supply chain Inter-organizational

Exploits a dynamic
traditional alliances partners join an collaboration involving
Alliances (with type of alliance
such as alliance network to transferring or/and
suppliers and known as a ‗‗virtual
partnerships and develop security disseminating green
customers) organization‘‘ for
joint ventures at the practices and share knowledge to partners and
product design
operating level knowledge customer cooperation
Create virtual
Uses a static organizations with Create an internal
organizational partners that vary Create a supply environmental management
Organizational
structure with few with different chain risk system and develop
structure levels in the product offerings management culture environmental criteria for risk-
hierarchy that change sharing
frequently
Approach to Supplier attributes Supplier attributes

Green purchasing
involve low cost involve speed, Flexible sourcing
choosing and high quality flexibility, and quality
suppliers
Introduce reusable/
Generates high remanufactured parts in the
turns and Strategic emergency material inventory; Reduce
Inventory Make in response to
minimizes inventory stock in potential replenishment frequencies to
strategy customer demand
throughout the critical points decrease carbon dioxide
chain emissions; Reduce redundant
materials
Reduce transportation lead

Shorten lead-time Invest aggressively
Lead time time as long it does not
as long as it does in ways to reduce Reduce lead-time
focus increase carbon dioxide
not increase cost lead times
emissions
Eco-design and incorporation

Maximize Design products to
Product design Postponement of complete material life cycle
performance and meet individual
for evaluating ecological risks
strategy minimize cost customer needs
and impact
Based on Table 2.1 and literature review, is possible to conclude: the main objective of each
paradigm is:
 Lean – cost reduction and elimination of waste.

 Agile – quickly response to changes in demand/market.
13
 Resilient – capacity to respond to unexpected disruption.

 Green – sustainable development and reduction of environmental impact.
There are some interesting conflicts between the paradigms, e.g., in respect to inventory
strategic; lean supply chains typically have lower emissions due to reduced inventory being held
internally at each company, but the frequent replenishment (due to low inventory level required
in lean paradigm) generally tends to increase emissions. As distance increases, it is quite
possible for lean and green to be in conflict (H. Carvalho & Machado, 2009; Venkat &
Wakeland, 2006). With the increase of replenishment, supply chains are increasingly covering
larger distances, consuming significantly more fossil-fuel energy for transportation and emitting
much more carbon dioxide (Venkat & Wakeland, 2006). So, lean may be green in some cases,
but not in others (H. Carvalho & Machado, 2009). Other conflict is between lean and resilient
paradigm; lean require low inventory to minimize inventory cost, and in resilient paradigm is
necessary a high inventory level due unexpected disturbance. The managers have to find the
better strategies for their company or supply chains.
2.2 Lean, Agile, Resilient and Green SCM Practices

To improve SCM performance it is needed to implement a set of practices in the SC‘s entities
and measure the impacts of these practices which can occur at the different entities. Following
is presented some practices of each paradigm, in each level of the chain. The practices
suggested are based in the literature review (S. Azevedo & Machado, 2009; Susana G.
Azevedo et al., 2010a; Susana Garrido Azevedo, Carvalho , & Machado, 2010; Helena
Carvalho, Azevedo, & Machado, 2010). Complete list are presented in annex 1. All practices
should contribute to an effective supply chain based on lean, agile, resilient and green
paradigm. According to (Susana G. Azevedo et al., 2010b), all these practices contributes to a
supply chain with less waste (non-value-added activities), more responsive to the customer
requirements, able to overcome disruption conditions and also to reduce environmental
impacts. There are some practices that can belong to one or more paradigm, and have different
impact on each paradigm.
2.2.1 Lean practices
Lean practices are all the practices that contribute to eliminate the waste and decrease the SC‘s
cost. Table 2.2 shows a set of lean practices that can be implemented in different level in the
chain.
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Table 2.2 Lean SCM practices.
Lean SCM practices
Demand stabilization
Distributor
Milk run or circuit delivery for smaller distances
Order/shipment tracking/notice
To use third-party logistics for transportations
Just in time (JIT) (focal firm → first tier customer)

Focal Firm
Pull flow control
Total quality management (TQM)
Supplier relationships/long-term business relationship
Just in time (JIT) (first tier supplier → focal firm)

Supplier
Just in sequence (JIS) (first tier supplier → focal firm)
Delivery materials directly to the point of use
Single sourcing and lean purchasing
2.2.2 Agile practices
Agile practices are all the practices reflect the entity ability to respond rapidly and cost
effectively to unpredictable changes. Table 2.3 shows some agile practices that can be
implemented in different level in the chain.
Table 2.3 Agile SCM practices.
Agile SCM practices
First choice partner

Distributor
Ability to change quantity of supplier‘s order
Ability to change delivery times of supplier‘s order
Use of IT to coordinate/integrate activities in procurement
Ability to change delivery times of supplier‘s order

Focal Firm
To use IT to coordinate/integrate activities in design and development
Rapidly reconfigure the production process
To increase frequencies of new product development
Speed in adjusting delivery capability

Supplier
To capture information immediately
Speed in increasing levels of product customization
To alter delivery schedules to meet customer requirement
15
2.2.3 Resilient practices
Resilient practices are a set of practices that reflect the entity ability to cope with unexpected
disturbances. Table 2.4 shows a set of resilient practices that can be implemented in different
level in the chain.
Table 2.4 Resilient SCM practices.
Resilient SCM practices
Sourcing strategies to allow switching of suppliers

Distributor
Developing visibility to a clear view of upstream inventories and supply conditions
Flexible supply base/flexible sourcing
Committing to contracts for material supply (buying capacity whether it is used or not)
Strategic stock
Focal Firm
Excess of capacity requirements
Creating total supply chain visibility
Developing collaborative working across supply chains to help mitigating risk
Maintaining a dedicated transit fleet

Supplier
Flexible transportation
Silent product rollover
Developing visibility to a clear view of downstream inventories
2.2.4 Green practices
It is necessary to integrate the organizational environmental management practices into the

entire supply chain in order to achieve a sustainable supply chain and maintain competitive
advantage (Linton, Klassen, & Jayaraman, 2007; Zhu et al., 2008). The green supply chain
management practices should cover all the supply chain activities, from green purchasing to
integrate life-cycle management, through to manufacturer, customer, and closing the loop with
reverse logistics (Zhu et al., 2008). Table 2.5 shows some green SCM practices.
Table 2.5 Green SCM practices.
Green SCM practices
Formal policy on green logistics/transport

Distributor
To invested in vehicles with reduced environmental impacts
To work with customers to change product specifications
To plan vehicles routes to reduce environmental impacts
To reduce energy consumption

Focal Firm
To reuse /recycling materials and packaging
Reverse logistics
ISO 14001 certification
Environmental collaboration with suppliers
16
Green procurement/sourcing
Supplier To work with product designers and suppliers to reduce and eliminate product environmental
To use recyclable pallet to delivery materials
2.3 Lean, Agile, Resilient and Green SCM Performance

Measurement
Performance measurement is crucial to better SCM (Cagnazzo, Taticchi, & Brun, 2010).To
develop an efficient and effective supply chain, it is necessary to assess its performance. .
Performance measures should provide the organization an overview of how they and their
supply chain are sustainable and competitive (Reichhart & Holweg, 2007). With this task, the
entities can check the impact of the strategies/practices implemented and potential
opportunities in supply chain management (and points to be improved). Cost, service level
(available in the right place at the right time), lead time (A. Agarwal, Shankar, & Tiwari, 2006;
Martin Christopher & Towill, 2000; Mason-Jones, Naylor, & Towill, 2000) and quality (of product)
may be used as key performance indicators. In each of KPIs we have different metrics that can
be used in different levels of the chain. (Susana G. Azevedo et al., 2010b), provides an
overview of operational and economical measures that can be used to evaluate the different
paradigms on SC‘s performance (see Table 2.6).
Table 2.6 Supply chain performance measures (Susana G. Azevedo et al., 2010b).
Metrics Measures
Customer reject rate

Quality
In plant defect fallow rate
Increment products quality
After-sales service efficiency

Customer satisfaction Rates of customer complaints
Operational Performance
Out-of-stock ratio
On time delivery
Delivery Delivery reliability
Responsiveness to urgent deliveries
Lead time
Time Cycle times
Delivery lead time
Finished goods equivalent units
Inventory levels Level of safety stocks
Order-to-ship
New product flexibility

Economic
Performa
nce
al
Cost Manufacturing cost
Cost per operating hour
17
Overhead expense
Efficiency
Operating expenses
Revenues from ‗green‘ products

Environmental revenues Recycling revenues
Cost avoidance from environmental action
Cost of scrap/rework
Fines and penalties
Costs for purchasing environmentally friendly materials

Environmental costs
Disposal costs
Recycling cost = transport + storage costs
R & D expenses ratio
Number of fairs/symposiums related to environmentally

Green image
conscious manufacturing the organization participate
Environmental Performance
Total flow quantity of scrap
Percentage of materials remanufactured

Business wastage Percentage of materials recycled /re-used
Hazardous and toxic material output
Solid and liquid wastes
Energy consumption
Emissions Green house gas emissions
Air emission
2.4 LARG Supply Chain Management Practices vs. Performance

(Susana G. Azevedo et al., 2010b), proposed a conceptual model to explore the relationships
between SCM practices and SC‘s performance measures. This model intends to find which
practices can be implemented to improve LARG performance measures, as cost, inventory
level, quality of products, customer satisfaction, time, business wastage, cash-to-cash cycle,
environmental costs (Table 2.7).
18
Table 2.7 LARG SCM practices influence on manufacturing supply chain performance (Susana G.
Azevedo et al., 2010b).
Supply chain performance
Environmental
Operational performance Economic Performance
performance
LARG supply chain practices
Inventory Customer Environmental Cash-to- Business

Quality Time Cost
levels satisfaction cost cash cycle wastage
Just in time ↓ ↑ ↓ ↓ ↓
Supplier relationships ↓ ↑ ↓ ↓ ↓
Cycle/setup time reduction ↓ ↓ ↓
Speed in improving responsiveness to ↑ ↓ ↓ ↓

changing market needs
To produce in large or small batches ↓ ↑ ↓
Ability to change delivery times of ↓ ↓

supplier‘s order
Developing visibility to a clear view of ↓ ↑ ↓ ↓

upstream inventories and supply
conditions
Lead time reduction ↑ ↓
Demand- based management ↓ ↑ ↓
Reduction in the variety of materials ↓ ↓ ↓ ↓

employed in manufacturing the products
To work with product designers and ↑ ↓ ↓

suppliers to reduce environmental
impacts
7 3 5 7 5 2 4 5
2.5 Supply Chain Characteristics

According to (H. Carvalho & Machado, 2009), to evaluate the contribution of the paradigms
practices in supply chain performance, it is necessary to establish the relationships between the
supply chain characteristics changed by the paradigms (designated by ―management
characteristics‖) and their relationships with key performance indicators. They considered the
following management characteristics: capacity surplus, replenishment frequency, information
frequency, integration level, inventory level, production lead time and, transportation lead time.
These characteristics can be altered to adjust the supply chain performance (H. Carvalho &
Machado, 2009). Fig. 2.2 shows the diagram with the performance indicators and management
characteristics relationships.
19
Figure 2.2 – Performance indicators and management characteristics relationships (H. Carvalho &
Machado, 2009).
The causal diagram represented in Fig. 2.1 is used to capture the supply chain dynamics. With
this causal scheme, it is possible to visualize how management characteristics affect the
performance indicators. A positive link indicates that the two nodes move in the same direction,
i.e., if the node in which the link start decreases, the other node also decreases (if all else
remains equal). In the negative link, the nodes change in opposite directions, i.e., an increase
will cause a decrease in another node (if all else remains equal) (H. Carvalho & Machado,
2009). Reading the diagram should be made as follows: for example, if production lead time
increase, lead time and cost will increase (negative effect). There are some relationships
between the management characteristics; an increased integration level will reduce the
inventory level. This impact will reflect in Lean and Resilient paradigm and/or perhaps in Green.
In lean paradigm we should have low inventory level to decrease the carrying cost; contrariwise,
if a company has low inventory level, lose their capacity to respond to unexpected disruption.
This challenge is be answered by developing the LARG ANP model, according to the enterprise
strategies.
The tradeoffs between lean, agile, resilient, and green SCM paradigms must be understood to
help companies and supply chains to become more efficient, streamlined, and sustainable. To
this end, it is necessary to develop a deep understanding of the relationships (conflicts and
commitments) between the lean, agile, resilient, and green paradigms (Fig. 2.1), exploring and
researching their contribute for the sustainable competitiveness of the overs production systems
in the supply chain, measured by its Cost, Lead Time, Quality (of product) and Service Level (H.
Carvalho & Machado, 2009).
Table 2.8 (H. Carvalho & Machado, 2009) shows an overview of main synergies and
divergences between the LARG paradigms. There are evidences that lean, agile, resilient, and
20
green paradigms are complemented by each others. According to (H. Carvalho & Machado,
2009), the implementation of these paradigms in the supply chain creates synergies in the way
that some supply chain characteristics should be managed, namely, ―information frequency‖,
―integration level‖, ―production lead time‖ and ―transportation lead time‖. However, the impact of
each paradigm implementation in the characteristics magnitude may be different. For example,
the lean paradigm seeks compulsively the reduction of production and transportation lead times
to reducing the total lead time and minimizing the total waste. However, the resilient paradigm,
although it prescribes this reduction in lead times, it is not so compulsive, since the objective is
to increase the supply chain visibility and capability to respond to unexpected disturbance (H.
Carvalho & Machado, 2009).
Table 2.8 Paradigms synergies and divergences overview (H. Carvalho & Machado, 2009).
21
22
Chapter 3 Models for Decision Making

Decision makers generally assume that logical thinking is the best and only way to make good
decisions. In doing so they neglect to observe that our mind is both rational and emotional. The
rational side is associated with logical and structured reasoning, whereas the emotional side is
concerned with feelings intuitions and hunches (Zammori, 2009). According to the great
mathematician Henri Lebesgue, making direct comparisons of objects with regard to a property
is a fundamental mathematical process for deriving measurements (T. L. Saaty, 2008).
Many people including mathematicians whose thinking is grounded in the use of Cartesian axes
based on scales of measurement believe that there is only way to measure things, and it needs
a physical measurement scale with a zero and a unit to apply to objects (T. L. Saaty, 2008). We
can also derive accurate and reliable relative scales that do not have a zero or a unit by using
our understanding and judgments that are the most fundamental determinants of why we want
to measure anything (T. L. Saaty, 2008).
Until the introduction of the Analytical Hierarchy Process (AHP) (T. L. Saaty, 1990) and its
generalization to dependence and feedback the Analytical Network Process (ANP) (T. L. Saaty,
2005), there were no effective means to combine feelings (hunches) and rationale in a
structured and formal mathematical way (Zammori, 2009). According to (Zammori, 2009), now it
is possible to make better decisions relying on both spheres of our mind, because the AHP and
the ANP are multi-criteria decision-making (MCDM) methods that combine intuition and
judgments with reason emphasizing the role of inconsistency in the decision-making process.
These methods are based on a multi-criteria measurement theory which provides a general
framework to deal with decisions in a structured way (Hou & Su, 2007): (i) by rigorously
structuring the problems as a hierarchy or a network of all the factors and the influences among
them, and (ii) by establishing the intensities of the influence relations through pairwise
comparison judgments. In this manner all the relevant knowledge and intuition that have bearing
on a decision are ―scientifically‖ gathered together and it is possible to discover the rationale
behind the best choice to be made and understand how quantitative reasoning underlies and
guides the decision (Zammori, 2009).
According to (T. L. Saaty, 2008), the paradigm of measurement has numerous practical
implications because it makes it possible for us to deal with intangible factors alongside
tangibles used in science and mathematics in a realistic and justifiable way. Among the many
applications made by companies and governments, now perhaps numbering in the thousands,
the AHP was used by International Business Machines (IBM) as part of its quality improvement
strategy to design its AS/400 computer and win the prestigious Malcolm Baldrige National
Quality Award (Bauer, Collar, & Tang, 1992). In (2001) it was used to determine the best site to
relocate the earthquake devastated Turkish city Adapazari. British Airways used it in 1998 to
choose the entertainment system vendor for its entire fleet of airplanes. A company used it in
1987 to choose the best type of platform to build to drill for oil in the North Atlantic (T. L. Saaty,
23
2008). Other interesting applications concern supplier selection (Gencer & Guerpinar, 2007;
Hou & Su, 2007), maintenance analysis (Braglia, Carmignani, Frosolini, & Grassi, 2006),
marketing analysis (Yuksel & Dagdeviren, 2007), supply chain management (C. L. Yang,
Chuang, & Huang, 2009) and design optimization (T. S. Li, 2010).
In addition to AHP/ANP, several multi-criteria decision-making (MCDM) methods have been

proposed in technical literature (T. L. Saaty, 2008). Among these one can cite the Weighted
Sum Model (WSM), Weighted Product Model (WPM), the ELECTRE Method, and the TOPSIS
Method, but many others exist and goods reviews can be found in (Curwin & Slater, 2008;
Figueira, Greco, & Ehrgott, 2005; Sweeney & Martin, 2008). According to (Zammori, 2009),
many comparisons [see for example (Bhutta & Huq, 2002; Triantaphyllou, 2002)] have revealed
that both the AHP and the ANP possess a number of benefits over the other MCDC methods,
such as: (i) they provide a realistic description of the problem, (ii) they support group decision-
making, (iii) they soundly structure the decision-making process, (iv) they incorporate both
quantitative and qualitative factors, (v) they clearly express the relative importance of factors,
(vi) they allow the decision makers to focus on each small part of the problem, (vii) they facilitate
the evaluation of alternative scenarios, by supporting what if and sensitivity analysis (Zammori,
2009).
3.1 Analytical Hierarchy Process (AHP)

Analytical Hierarchy Process (AHP) is a multi-criteria decision support methodology, introduced
by Saaty, in 1980. According to (T. L. Saaty & Vargas, 2006b), the AHP is a general theory of
measurement and one of the widely used approaches to handle such a multi-criteria decision-
making problem. To him, it is used to derive relative priorities on absolute scales (invariant
under the identify transformation) from both discrete and continuous paired comparisons in
multilevel hierarchic structures. To (Taylor, 2004), AHP is a method for ranking decision
alternatives and selecting the best one when the decision maker has multiple criteria. With AHP,
the decision maker selects the alternatives that best meets his or her decision criteria
developing a numerical score to rank each decision alternative based on how well each
alternative meets them (Özdagoglu & Özdagoglu, 2007). In its general form, the AHP is a
nonlinear framework for carrying out both deductive and inductive thinking without use of the
syllogism (T. L. Saaty & Vargas, 2006b).
The Analytical Hierarchy Process (AHP) is a flexible multi-criteria decision-making method

which can be used to effectively synthesize the judgments given by a team of experts in order to
make better decisions in complex settings, where both tangible and intangible criteria must be
considered (T. L. Saaty, 1990). The application of the AHP to the complex problem usually
involves four major steps (Cheng, Yang, & Hwang, 1999):
i. Break down the complex problem into a number of small constituent elements and then
structure the elements in a hierarchical form;
24
ii. Make a series of pairwise comparisons among the elements according to a ratio scale;
iii. Use the eigenvalue method to estimate the relative weights of the elements;
iv. Aggregate these relative weights and synthesize them for the final measurement of
given decision alternatives.
The AHP is a powerful and flexible multi-criteria decision-making tool for dealing with complex
problems where both qualitative and quantitative aspects need to be considered. The AHP
helps analysts to organize the critical aspects of a problem into a hierarchy rather like a family
tree (Maurizio, D'Amore, & Polonara, 2004). The essence of the process is decomposition of a
complex problem into a hierarchy with goal (criterion) at the top of the hierarchy, criteria and
sub-criteria at levels and sub-levels of the hierarchy, and decision alternatives at the bottom of
the hierarchy. Elements at given hierarchy levels are compared in pairs to assess their relative
preference with respect to each of the elements at the next higher level. The method computes
and aggregates their eigenvectors until the composite final vector of weight coefficients for
alternatives is obtained. The entries of final weight coefficients vector reflect the relative
importance (value) of each alternative with respect to the goal stated at the top of the hierarchy
(Pohekar & Ramachandran, 2004). A decision maker may use this vector according to his
particular needs and interests (Özdagoglu & Özdagoglu, 2007).
According to (Ho, 2008), the AHP consists of three main operations, including hierarchy
construction, priority analysis, and consistency verification.
3.1.1 AHP methodology
In particular it is based on the three following principles (T. L. Saaty, 2000):
(1) The experts define the elements of the problem (i.e. decision criteria) and arrange them
in the form of a hierarchy of objectives with parent elements in a given level connected
to their children elements in a level below. The top level of the hierarchy represents the
goal of the problem, while the bottom level contains the alternatives that can be chosen
to maximize the objective. The first and the last level are connected through a series of
intermediate levels, which represent the sub-criteria and other concerns in which the
goal is decomposed.
(2) The experts assess (i.e. weight) the relative importance of criteria, sub-criteria and
alternatives with respect to the elements in the higher level to which they are
connected.
(3) All the judgments throughout the structure are used to derive corresponding priority
scales that are then synthesized to determine the overall priorities of the alternatives.
The experts express their judgments in the form of comparisons between two elements (of the
same level of the hierarchy) using the fundamental scale of absolute numbers (T. L. Saaty,
2005) (that will be described in the next point).
25
3.1.2 The Fundamental Scale
When are used judgment to estimate dominance in making comparisons, and in particular when
the criterion of the comparisons is an intangible, instead of using two numbers w i and wj from a
scale (if we must rather than interpreting the significance of their ratio wi/wj) we assign a single
number drawn from the fundamental 1-9 scale of absolute numbers shown in Table 3.1 to
represent the ratio (wi/wj)/1. It is a nearest integer approximation to the ratio wi/wj. The derived
scale will reveal what the wi and wj are. This is a central fact about the relative measurement
approach and the need for a fundamental scale. This scale is derived from basic principles
involving the generalization of comparisons to the continuous case, obtaining a functional
equation as a necessary condition and then solving that equation in the real and complex
domains (T. L. Saaty, 2008).
Table 3.1 The Fundamental Scale of Absolute Numbers (T. L. Saaty, 2008).
Intensity of Definition Explanation

Importance
1 Equal importance Two activities contribute equally to the objective
2 Weak or slight
3 Moderate importance Experience and judgment slightly favor one activity over
another
4 Moderate plus
5 Strong importance Experience and judgment strongly favor one activity over
another
6 Strong plus
7 Very strong or demonstrated importance An activity is favored very strongly over another; its dominance
demonstrated in practice
8 Very, very strong
9 Extreme importance The evidence favoring one activity over another is of the
highest possible order of affirmation
1.1 – 1.9 When activities are very close a decimal A better alternative way to assigning the small decimals is to
is added to 1 to show their difference as compare two close activities with other widely contrasting
appropriate ones, favoring the larger one a little over the smaller one when
using the 1 – 9 values
Reciprocals of If activity i has one of the above nonzero A logical assumption

above numbers assigned to it when compared
with activity j, then j has the reciprocal
value when compared with i
Measurements When it is desired to use such numbers in physical

from ratio applications. Alternatively, often one estimates the ratios of
scales such magnitudes by using judgment
(T. L. Saaty, 2008) has assumed that an element with weight zero is eliminated from
comparison because zero can be applied to the whole universe of factors not included in the
26
discussion. Reciprocals of all scaled ratios that are >= 1 are entered in the transpose positions
(T. L. Saaty, 2008).
The comparisons are made on homogeneous elements that are close so the judgments would
not be wild guesses. If they are not homogeneous, they are carefully selected to go into groups
or clusters with a common element from one group to the next (Zammori, 2009).
For example, if A1 is a decision criterion and A11 and A12 are two of its sub-criteria, the experts
must assess the relative importance of A11 over A12 by answering the following question: ―with
respect to A1, how much more important is A11 than A12?‖ The assessment is made using an
integer value from the scale unless A12 dominates A11, in which case the integer is used for this
comparison and its reciprocal value is used for the first comparison (Zammori, 2009). Using this
process, which is called a ―pairwise comparison‖ it is possible to improve the quality of the
judgments because it is easier to concentrate on just two factors at one time and to provide a
comparative value from the scale than a number off the top of one‘s head (Zammori, 2009).
To derive priorities, all possible pairwise comparisons on the children of each parent with
respect to the common property it represents should be made. It is worth noting that it is
possible to reduce the number of questions that must be answered by means of short cuts, yet
this approach is not advisable because it can decrease the validity of the results obtained. The
criteria are pairwise compared with respect to the goal, the sub-criteria with respect to each
parent criterion, and the decision alternatives with respect to the last level of sub-criteria above
them (Zammori, 2009).
To derive the weights of the elements of the hierarchy, each time a set of children nodes (i.e.
sub-criteria) are pairwise compared with respect to a parent node, all the relative judgments
must be arranged in a reciprocal comparison matrix A = (a ij) where the generic ijth cell contains
the value of the comparison of the ith element with respect to the jth one. Therefore all the
elements along the diagonal are equal to one, while a generic element aij is greater than one if
the ith elements is dominant over the jth one and is less than one otherwise. Furthermore, due
to the reciprocity of the comparisons, the value of the aji elements must be equal to 1/aij
(Zammori, 2009).
Fig. 3.1 shows an example of a AHP model (Zammori, 2009). This model was developed to
predict the outcome of the most likely nominee for the Democratic party, by comparing Senator
H. Clinton with Senator B. Obama in 2008 United States presidential election. After this
process, the AHP was applied by comparing the Democratic winner with Senator J. McCain of
the Republican party.
27
Figure 3.1 – The AHP model for the selection of the Democratic Nominee (Zammori, 2009).
In particular, the hierarchy shown in Fig. 3.1 was developed to synthesize all the interactions in
a logical way that captures the priorities and preferences of the voters (Zammori, 2009).
3.2 Analytical Network Process (ANP)

The Analytic Network Process (ANP) is a multi-criteria approach [introduced by (Thomas L.
Saaty, 2001)] that generalizes the AHP without making assumptions about the independence of
higher elements from lower level elements in a hierarchy or about the independence of
elements in the same level (as required in AHP). The difference between the two approaches is
that while the AHP decomposes a problem into several levels in the form of a hierarchy of
independent elements, the ANP replaces hierarchies with networks and makes it possible to
structure a decision in the most general way conceivable (T. L. Saaty, 2005). The ANP
captures the outcome of dependence and feedback between components of elements (Thomas
L. Saaty, 2001). The ANP suggests a structured procedure where all relationships (influences)
between the alternatives are assessed and synthesized into an overall outcome (Asan & Soyer,
2009). We apply ANP when we deal with complex interactions and indirect relationships existing
between the elements of our problem. According to (T. L. Saaty, 2008), the ANP is our logical
way to deal with dependence. To him, a hierarchy is a special case of network with connections
going only in one direction.
28
A network has clusters of elements, with the elements in one cluster being connected to
elements in another cluster (outer dependence) or the same cluster (inner dependence) (T. L.
Saaty, 2008). The structural difference between a hierarchy and a network is illustrated in Fig.
3.2.
Figure 3.2 Comparison of a hierarchy with a network (Zammori, 2009).
As can be seen from Fig. 3.2, a hierarchy is a linear top down structure with no feedback from
bottom to top levels. It is characterized by a goal cluster at the top and an alternatives cluster at
the bottom Note that in Fig. 3.2, there is a loop in the bottom level of the hierarchy to indicate in
a formal way that each element of that level depends only on itself (i.e. nodes are independent).
A network does not require a strictly hierarchy organization for its clusters and can spread in
any direction. In this way influences and inner dependencies can be transmitted from a cluster
to another either directly or through one of the paths of the network (Zammori, 2009).
The components of the systems are represented as nodes, and two nodes are connected by an
arrow if there is interaction between them. The orientation of an arrow shows the direction of the
influences (i.e. interaction) between nodes (Zammori, 2009). As it seen from Fig. 3.2, X → Y
means that the elements of a component Y depends on component X (Yu & Cheng, 2007)
Loops denote inner dependencies among nodes of the same cluster. The strength of the
dependencies is given by W ij, which is a matrix containing numerical entries of the priorities of
the strengths of influences of the ith cluster nodes on the elements of the jth cluster (Zammori,
2009).
According to (Zammori, 2009), the structure of a network is determined by its clusters, its nodes
(i.e. elements) and the connections between them. Clusters contain elements that share
common attributes and can be considered to be similar in some regard.
Connections represent the interdependency of two nodes and the arrow direction shows in
which directions the influences flows. Thus, in an ANP network, two clusters are connected by
an arrow when least one element in the first cluster is connected to one or more elements in the
second cluster (Zammori, 2009). Fig. 3.3 illustrates an ANP model developed by (Gencer &
29
Guerpinar, 2007), where they consider supplier selection as a multi criteria decision problem.
The proposed model of supplier selection was implemented in an electronic company.
Figure 3.3 - An example of ANP model (Gencer & Guerpinar, 2007)
3.2.1 Outline of Steps of the ANP
To develop an ANP model we can follow a set of steps pointed by (T. L. Saaty, 2008). These
steps may not be always followed rigorously, each decision makers can adapt to this problem.
The steps are:
(1) Describe the decision problem in detail including its objectives, criteria and sub-criteria,
actors and their objectives and the possible outcomes of that decision. Give details of
influences that determine how that decision may come out.
(2) Determine the control criteria and sub-criteria in the four control hierarchies one each
for the benefits, opportunities, costs and risks of that decision and obtain their priorities
from paired comparisons matrices. If a control criterion or sub-criterion has a global
priority of 3% or less, you may consider carefully eliminating it from further
consideration. The software automatically deals only with those criteria or sub-criteria
that have subnets under them. For benefits and opportunities, ask what gives the most
benefits or presents the greatest opportunity to influence fulfillment of that control
criterion. For costs and risks, ask what incurs the most cost or faces the greatest risk.
Sometimes (very rarely), the comparisons are made simply in terms of benefits,
opportunities, costs, and risks in the aggregate without using control criteria and sub-
criteria.
(3) Determine the most general network of clusters (or components) and their elements
that apply to all the control criteria. To better organize the development of the model as
well as you can, number and arrange the clusters and their elements in a convenient
30
way (perhaps in a column). Use the identical label to represent the same cluster and the
same elements for all the control criteria.
(4) For each control criterion or sub-criterion, determine the clusters of the general
feedback system with their elements and connect them according to their outer and
inner dependence influences. An arrow is drawn from a cluster to any cluster whose
elements influence it.
(5) Determine the approach you want to follow in the analysis of each cluster or element,
influencing (the preferred approach) other clusters and elements with respect to a
criterion, or being influenced by other clusters and elements. The sense (being
influenced or influencing) must apply to all the criteria for the four control hierarchies for
the entire decision.
(6) For each control criterion, construct the super-matrix by laying out the clusters in the
order they are numbered and all the elements in each cluster both vertically on the left
and horizontally at the top. Enter in the appropriate position the priorities derived from
the paired comparisons as sub-columns of the corresponding column of the super-
matrix.
(7) Perform paired comparisons on the elements within the clusters themselves according
to their influence on each element in another cluster they are connected to (outer
dependence) or on elements in their own cluster (inner dependence). In making
comparisons, you must always have a criterion in mind. Comparisons of elements
according to which element influences a given element more and how strongly more
than another element it is compared with are made with a control criterion or sub-
criterion of the control hierarchy in mind.
(8) Perform paired comparisons on the clusters as they influence each cluster to which they
are connected with respect to the given control criterion. The derived weights are used
to weight the elements of the corresponding column blocks of the super-matrix. Assign
a zero when there is no influence. Thus obtain the weighted column stochastic super-
matrix.
(9) Compute the limit priorities of the stochastic super-matrix according to whether it is
irreducible (primitive or imprimitive [cyclic]) or it is reducible with one being a simple or a
multiple root and whether the system is cyclic or not. Two kinds of outcomes are
possible. In the first all the columns of the matrix are identical and each gives the
relative priorities of the elements from which the priorities of the elements in each
cluster are normalized to one. In the second the limit cycles in blocks and the different
limits are summed and averaged and again normalized to one for each cluster.
Although the priority vectors are entered in the super-matrix in normalized form, the limit
priorities are put in idealized form because the control criteria do not depend on the
alternatives.
31
3.3 Additional considerations of AHP and ANP

ANP is a comprehensive decision-making technique that has the capability to include all the
relevant criteria, which have some bearing, in arriving at a decision. AHP serves as the starting
point of ANP (Thomas L. Saaty, 2001). Generally speaking, the ANP is more accurate and
gives better results than the AHP (Zammori, 2009). Moreover, the ANP provides a general
framework to deal with decisions without making assumptions about the independence of higher
level elements from lower level elements, i.e., the ANP makes possible to deal with all kinds of
dependence and feedback in a decision system (Bayazit, 2006; Zammori, 2009). Therefore,
anytime there are dependences between criteria and/or alternatives, if one tries to model the
problem as a linear hierarchy, the risk of getting an inconsistent result (i.e. an unsound ranking)
is considerably high (Zammori, 2009).
According to (Zammori, 2009), turning a hierarchy in a network (in order to capture the most
number of possible influences between factors), significantly increases the complexity of the
model. An example is provided by Saaty in this work (T. L. Saaty, 1999), where a hierarchy is
converted into a network and it is shown that the number of judgments increases from 79 to
624. Another disadvantage of the ANP is that the comprehension of a network is not as intuitive
as that of a linear hierarchy. In other words, when the problem is structured in a hierarchy of
decision criteria the flow of influence is clear, as it proceeds outright from the top level (i.e. the
goal of the problem) to the bottom level (i.e. the alternatives) moving through a series of
intermediate levels , which represent the sub-criteria in which the goal is decomposed. The
same is not true for a network, for in this case there is not an origin and neither an end, and the
relative influences between clusters and/or node are confounded and less detectable. Thus,
making pairwise comparisons becomes more difficult and requires a deeper understanding of
how the network has been built. As a consequence, whether the AHP permits one to develop
the model before presenting it to a panel of experts (to gather the necessary judgments and for
validation purposes), in the case of the ANP these two steps (i.e. building and validation) cannot
be easily detached, and it is advisable to involve the experts from the very beginning of the
development of the network (Zammori, 2009).
(T. L. Saaty, 2008), cite five types of criticisms of the AHP. One is the concern with illegitimate
changes in the ranks of the alternatives, called rank reversal, upon changing the structure of the
decision. It was believed that rank reversal is legitimate only when criteria or priorities of criteria
or changes in judgments are made. The second concern is about inconsistent and their effect
on aggregating such judgments or on deriving priorities from them. The third criticism has to do
with attempts to preserve rank from irrelevant alternatives by combining the comparison
judgments of a single individual using the geometric mean (logarithmic least squares) to derive
priorities and also combining the derived priorities on different criteria by using multiplicative
weighting synthesis. The fourth criticism has to do which people trying to change the
fundamental scale despite the fact that it is theoretically derived and tested by comparing it with
numerous other scales on a multiplicity of examples for which the answer was known. The fifth
32
and final criticism has to do with whether or not the pairwise comparisons axioms are behavioral
and spontaneous in nature to provide judgments.
Interestingly, the AHP/ANP provides a way to make complex decisions in the most general
structures encountered in real life (T. L. Saaty, 2008). AHP should be used instead of the ANP
whenever there are not evident dependencies between decision elements (or one can assume
that such mutual influences are negligible) and when the problem can be soundly structured in
the form of a linear hierarchy (Zammori, 2009).
Both AHP and ANP have been used separately or in conjunction with fuzzy in different areas,
such as: management, manufacturing, industry, political, government, personal decision
making, social, education, sports, tourism, service, military, etc. The pairwise comparison is
done using the same fundamental comparison scale (1 – 9).
3.2 Some applications of AHP/ANP
Research articles Contributions Applications Specific areas
(Zammori, 2009) The analytic hierarchy and network processes: Politics/Marketing Presidential
Applications to the US presidential election and to the election/market share
market share of ski equipment in Italy
(Asan & Soyer, 2009) Identifying strategic management concepts: An analytic SCM Strategic management
network process approach concepts
(Sagir & Ozturk, 2010) Exam scheduling: Mathematical modeling and parameter Educational Exam scheduling
estimation with the Analytic Network Process approach systems
(Aragones-Beltran, Valuation of urban industrial land: An analytic Engineering Industrial land

Aznar, Ferris-Onate, & network process approach
Garcia-Melon, 2008)
(Jharkharia & Shankar, Selection of logistics service provider: An analytic Logistics Service provider
2007) network process (ANP) approach selection
(A. Agarwal et al., 2006) Modeling the metrics of lean, agile and leagile supply SCM Metrics modeling
chain: An ANP-based approach
(Gencer & Guerpinar, Analytic network process in supplier selection: A case Logistics Supplier selection
2007) study in an electronic firm
(Yuksel & Dagdeviren, Using the analytic network process (ANP) in a SWOT Marketing SWOT analysis
2007) analysis – A case study for a textile firm
(C. W. Chang, Wu, & Analytic network process decision-making to Quality Control quality
Chen, 2009) assess slicing machine in terms of precision and
control wafer quality
(Z. H. Yang & Zhang, Environmental performance measurement for GSCM Green performance
2006) green supply chain: An ANP-based approach measurement
(Troutt & Tadisina, The Analytic Hierarchy Process as a model base General Salary processing
1992) for a merit salary recommendation system
3.4 Fuzzy set theory

In most of the real-world problems, some of the decision data can be precisely assessed while
others cannot (Özdagoglu & Özdagoglu, 2007). Fuzzy logic/ fuzzy set theory has been
33
introduced by Zadeh in 1965, when he extended the work on possibility theory into a formal
system of mathematical logic, and introduced a new concept for applying natural language
terms.
Unlike two-valued conventional (Boolean) logic, fuzzy logic is multi-valued. It deals with degrees
of membership degrees of truth. Fuzzy logic uses the continuum of logical values between 0
and 1. Instead of just black and white, it employs the spectrum of colors, accepting that things
can be partly true and partly false at the same time. In other words, fuzzy logic is a superset of
Boolean logic that has been extended to handle the concept of partial truth-values between
completely true and completely false (Bezdek, 1993).
Two major different kinds of uncertainties that exist in the real life, ambiguity and vagueness,
are addressed by fuzzy logic. While ambiguity is associated with one to many relations, that is,
situations in which the choice between two or more alternatives is left unspeciﬁed, vagueness is
associated with the difficulty of making sharp or precise distinctions in the world; that is, some
domain of interest is vague if it cannot be delimited by sharp boundaries (Inuiguchi & Ramik,
2000).
From the modeling point of view, fuzzy models and statistical models also possess
philosophically different kinds of information: fuzzy memberships represent similarities of objects
to imprecisely deﬁned properties, while probabilities convey information about relative
frequencies. Thus, fuzziness deals with deterministic plausibility and not nondeterministic
probability (Topaloglu & Selim, 2010).
Fuzzy set theory has proven advantages within vague, imprecise and uncertain contexts and it
resembles human reasoning in its use of approximate information and uncertainty to generate
decisions. It was specially designed to mathematically represent uncertainty and vagueness
and provide formalized tools for dealing with the imprecision intrinsic to many decision
problems. Fuzzy set theory implements classes and grouping of data with boundaries that are
not sharply defined (i.e. fuzzy). The major contribution of fuzzy set theory is its capability of
representing vague data (Chan, Kumar, Tiwari, Lau, & Choy, 2008).
In complex systems, the experiences and judgments of humans are represented by linguistic
and vague patterns. Therefore, a much better representation of these linguistics can be
developed as quantitative data, this type of data set is then refined by the evaluation methods of
fuzzy set theory (Özdagoglu & Özdagoglu, 2007).
According to (Chan et al., 2008), the fuzzy set is characterized by a membership function, which
assigns to each object a grade of membership ranging between 0 and 1. In this set the general
terms such as ―large‖, ―medium‖ and ―small‖ each will be used to capture a range of numerical
values (Chan et al., 2008).
34
3.5 Fuzzy AHP

Humans are unsuccessful in making quantitative predictions, whereas they are comparatively
efficient in qualitative forecasting (Kulak & Kahraman, 2005). Essentially, the uncertainty in the
preference judgments gives rise to uncertainty in the ranking of alternatives as well as difficulty
in determining consistency of preferences (Leung & Cao, 2000).
Basically Fuzzy AHP (FAHP) is the fuzzy form of AHP. It has the ability to extract the merits of
both approaches to efficiently and effectively tackle the multi-attribute decision making problems
(global supplier selection: a Fuzzy-AHP approach). The Fuzzy AHP technique can be viewed as
an advanced analytical method developed from the traditional AHP (Özdagoglu & Özdagoglu,
2007).
The AHP is one of the extensively used multi-criterion decision making methods but it has been
generally criticized because of the use of a discrete scale of one to nine which cannot handle
the uncertainty and ambiguity present in deciding the priorities of different attributes (Chan et
al., 2008). That is the reason that many authors suggest the use Fuzzy AHP to solve this
limitation and other suggest no application of fuzzy in AHP because they consider that the AHP
is too vague and ambiguous. Table 3.3 shows some recent applications of Fuzzy AHP.
3.3 Some applications of Fuzzy AHP.
(Chan et al., 2008) Global supplier selection: a fuzzy-AHP approach Logistics Supplier selection
(Srdjevic & Medeiros, Fuzzy AHP Assessment of Water Management Plans Water distribution Water Management
2008)
(Cebeci & Kilinc, 2007) Selecting RFID Systems for Glass Industry by Using Glass Industry System RFID
Fuzzy AHP Approach
(Karimi, Mehrdadi, Selection of wastewater treatment process based Environmental Wastewater treatment
Hashemian, Bidhendi, on the analytical hierarchy process and fuzzy management
& Moghaddam, 2011)
analytical hierarchy process methods
(Kilincci & Onal) Fuzzy AHP approach for supplier selection in a Logistics Supplier selection
washing machine company
3.6 Fuzzy ANP

If all the attributes and alternatives are connected in a framework that involves interactions and
dependencies at various levels, the need for a holistic approach like ANP is essential. The
characteristics of conventional ANP include the pairwise comparisons at each level using a
nine-point Saaty scale (Guneri, Cengiz, & Seker, 2009). Some of the disadvantages of
conventional ANP include crisp decision making, unbalanced judgment scale, imprecise ranking
and subjective judgment. In order to overcome the vagueness and uncertainty associated with
the judgment of decision makers and to overcome the crisp pairwise comparisons, techniques
like Fuzzy ANP (FANP) are preferred (Vinodh, Gautham, Ramiya, & Rajanayagam, 2010). Due
35
to the vagueness and uncertain decision making with conventional ANP, the concept of Fuzzy
ANP is found to be advantageous. Fuzzy ANP replaces the hierarchies into a network structure,
in which all elements are interlinked (Y. H. Chang, Wey, & Tseng, 2009).
3.4 Some applications of Fuzzy ANP.
(Vinodh et al., 2010) Application of fuzzy ANP for agile concept selection in a SCM Agile concept selection
manufacturing organization
(Vinodh, Ramiya, & Application of fuzzy analytic network process for supplier Logistics Supplier selection
Gautham, 2011) selection in a manufacturing organisation
(Guneri et al., 2009) A fuzzy ANP approach to shipyard location selection Logistics Location selection
(Tuzkaya & Onut, 2008) A fuzzy analytic network process based approach Logistics Transportation
to transportation-mode selection between Turkey programing
and Germany: A case study
(Özgen & Tanyas, 2011) Joint selection of customs broker agencies and Logistics Transportation
international road transportation firms by a fuzzy
analytic network process approach
36
Chapter 4 Information System Modeling Techniques

Requirements capture is arguably the most important step in software engineering, and yet the
most difficult and the least formalized one (Mili et al., 2010). Enterprises build information
systems to support their business processes. Software engineering research has typically
focused on the development process, starting with user requirements – if that- with business
modeling confused with software system modeling (Isoda, 2001). Researches and practitioners
in management information systems, have long recognized that understanding the business
processes that an information system must support is key to eliciting the needs of its users [see
e. g., (Eriksson & Penker, 2000)] but lacked of tools to model such business process or to relate
such models to software requirements (Mili et al., 2010).
4.1 Information sharing

Prior to the 1980s, a significant portion of the information flows between functional areas within
an organization, and between supply chain member organizations, were paper-based In many
instances, these paper-based transactions and communications were slow, unreliable, and error
prone. Conducting business in this manner is costly because it decreases firm‘s effectiveness in
being able to design, develop, procure, manufacture, and distribute their products (Handfield &
Nichols, 1998). Companies historically have considered information an asset to be hoarded and
protected, rather than shared. Sharing information with suppliers, for examples, weakens
negotiating positions (Groznik & Maslaric, 2010). Effective information sharing means that you
no longer have to own all the pieces of the supply chain to effectively operate as a single entity
(Sturim, 1999).
Information sharing is a key ingredient for any SCM system (Moberg, Cutler, Gross, & Speh,
2002). By taking the data available and sharing it with other parties within the supply chain, an
organization can speed up the information flow in the supply chain, improve the efficiency and
effectiveness of the chain, and respond to customer changing needs quicker. Therefore,
information sharing will bring the organization competitive advantage in the long run (Groznik &
Maslaric, 2010). Information should be readily available to all companies in supply chains and
the business process should be structured so as to allow the full use of this information
(Trkman, Stemberger, Jaklic, & Groznik, 2007). The information systems and the technologies
utilized in these systems represent one of the fundamental elements that ―link‖ the organizations
of a supply chain into a unified and coordinated system (Handfield & Nichols, 1998).
The bullwhip effect, for example, is a consequence of lack or distorted information in the supply
chain. According to (Lee, Padmanabhan, & Whang, 1997), distorted information from one end
of a supply chain to the other can lead to tremendous inefficiencies: excessive inventory
investment, poor customer service, lost revenues, misguided capacity plans, ineffective
transportation, and missed production schedules.
37
4.2 Business Process Modeling Languages

4.2.1 What is a Business Process
Business processes are at the core of today‘s business world. Most of the effort put into
business processes in practice is either the task of designing a new process or the task of
analyzing and improving an existing process. In both cases, visualizations of the process
models support the user in achieving his objectives (Effinger, Siebenhaller, & Kaufmann, 2009).
The world ―process‖ is defined in the dictionary as ―a series of actions, changes, or functions
bringing a result‖ (Mili et al., 2010). (Curtis, Kellner, & Over, 1992) defined a process as a
partially ordered set of tasks or steps undertaken towards a specific goal. (Hammer & Champy,
1993) define business processes as a set of activities that, together, produce a result of value to
the customer. The workflow management coalition defines business process as ―a set of one or
more linked procedures or activities which collectively realize a business objective or policy
goal, normally within the context of an organizational structure defining functional roles and
relationships (Coalition, 1999).
4.2.2 Why Business Processes
In traditional view, a business is considered a hierarchical organization that reflects both the
functional decomposition of the enterprise and the chain of command (Mili et al., 2010).
Different departments specialize in specific business functions (e.g., marketing or production or
accounting), and within each department, sub departments, teams, and individuals specialize in
sub functions. The processing of a customer order generally cross the boundaries of various
departments: sales (to take the order), planning (to plan the manufacture of the product or the
replenishment of the inventory), production, shipping, and accounting (Mili et al., 2010). When
we talk about ―business process modeling‖, we must identify which processes we are interested
in, at what level of detail, and what are the relationships between these processes, if any (Mili
et al., 2010).
Assume that a company aims at increasing its market share for its products. There are several
ways to achieve this goal, including product innovation, competitive pricing, targeted marketing,
building customer loyalty, responsive customer service, and so on (Mili et al., 2010).
According to (Ould, 1995), business process modeling is useful for three basic reasons, which
may in turn support several business goals.
(1) Describing a process. We model a process to be able to describe it. We could have
different target audiences for these descriptions, for instance, humans, in which case
understandability is important (Curtis et al., 1992), or machines, in which case formality
is important (Mili et al., 2010).
(2) Analyzing a process. Simply put, process analysis consists of assessing the properties
of a process. Process reengineering and improvement relies on an analysis of existing
processes to identify redundant or suboptimal steps. If the process is described
38
formally, we can verify mechanically structural properties such as coupling and

cohesion (Phalp & Shepperd, 2000) or dynamic properties such as the absence of
deadlock, liveness properties, and so on (Mili et al., 2010).
(3) Enacting a process. We may enact a process for simulation purpose or to provide some
level of support for process execution. Depending on the language, this support can
take different forms: reacting to events triggered by the execution of the process,
checking that specific constraints are satisfied, or driving the execution of the process
(Curtis et al., 1992). Only formal languages make process enactment possible.
Language designers may put the emphasis on one of these basic usages, often at the
expense of others (Mili et al., 2010).
Because business processes are complex, language designers generally provide different
modeling views, each focusing on one aspect of the process. Curtis identified four views,
summarized here (Curtis et al., 1992):
(1) The functional view presents the functional dependencies between the process
elements (activities, sub processes, etc.). These dependencies are typically embodied
in the fact that some process elements consume (or need) data (or resources)
produced by others. Typical notations used in the functional view include data flow
diagrams.
(2) The dynamic (behavioral) view provides sequencing and control information about
process, that is, when certain activities are performed (timing, pre-conditions) and how
they are performed (e.g., by describing the control logic).
(3) The informational view includes the description of the entities that are produced,
consumed, or otherwise manipulated by the process. These entities include pure data,
artifacts, and products.
(4) The organizational view describes who performs each task or function, and where in the
organization (functionally and physically).
4.2.3 Business Process Modeling Notation (BPMN)
Business Process Model (BPM) can be expressed in several different notations, one of the most
important being Business Process Modeling Notation (Delgado, García-Rodríguez de Guzmán,
Ruiz, & Piattini, 2010). Is an important tool for understanding the activities and information
which are typically used to achieve business goals. So far it is a popular way of describing and
improving business process. The aim of the business process modeling in the phase of analysis
is to understand processes in a domain (Macek & Richta, 2009). BPMN is a notation for
representing business. BPMN focuses on the dynamic aspects of business processes; it covers
neither the functional view, the information view, nor the organizational view. Because its
primary goal is human understanding, it is not executable. With BPMN, business processes are
represented in business process diagrams (BPD). However, the standard does not specify an
exchange format for BPMN diagrams (Mili et al., 2010). The execution of business processes
39
usually involves expanding several actions or areas in single or even different organizations
(Delgado et al., 2010).
Business process modeling is used to communicate a wide variety of information to a wide of

audiences. BPMN is designed to cover many types of modeling and allows the creation of end-
to-end business process. The structural elements of BPMN will allow the viewer to be able to
easily differentiate between sections of a BPMN diagram. There are three basic types of sub-
models within an end-to-end BPMN model [((OMG), January 2011)and (Mili et al., 2010)].
(1) Private (internal) business processes. These are the processes that are internal to an
organization, and which may typically be implemented by a workflow management
system;
(2) Abstract (public) business processes. This type of model represents interaction points
between a process that is internal to an organization (private business process) and the
outside world (another process or participant); it shows the public interface of an
internal process in terms of the message(s) that trigger it, and the subsequent message
exchanges between the outside world and the internal process; abstract processes are
contained within a pool and can be modeled separately or within a larger BPMN
diagram to show the message flow between the abstract process activities and other
entities.
(3) Collaboration (global) processes. Such processes describe the interaction between two
or more business entities, each of which has its own internal process. These
interactions are defined as a sequence of activities that represent the message
exchange patterns between the entities involved.
(Mili et al., 2010) illustrates the three kinds of models through a simple purchasing process
example. Fig. 4.1 shows an example of a private business process occurring within an
organization. A ―user‖ needs some product – the start event. He or she fills out an order
request, which goes to purchasing. Purchasing turns around and creates a ―Request for
Quotation‖ that it sends to a number of suppliers. After the suppliers respond, it selects a
supplier, and then sends them a Purchasing Order (PO). When the product arrives, purchasing
receives the product (ascertains that it is received in good condition), and forwards the invoice
to accounts payable who pay the invoice. The arrows between the tasks are control sequences.
The tasks were separated into swimlanes, one per role in the process. Here, we have three
functional roles: the ―User‖ who needs the product; the ―Purchasing Department‖ which turns
that need into a PO dent to a supplier for a specific product; and ―Accounts Payable‖ which pays
the bill (Mili et al., 2010).
40
Figure 4.1 – A private business process using BPMN notations (Mili et al., 2010).
Fig. 4.2 shows the corresponding public process. Here, the focus is in the message exchanged
with the outside world – in this case, the selected supplier. Only those tasks that send or receive
messages are shown in the diagram (Mili et al., 2010).
Figure 4.2 – The abstract public purchasing process (Mili et al., 2010).
A collaboration process is one involving two or more partners that show the messages
exchanged between them to accomplish a joint goal. Collaboration processes involve the
abstract public processes of the partners. Fig. 4.3 shows a collaboration process involving a
buyer and a supplier. The difference between Fig. 4.2 and 4.3 is that is showed what happens
on the supplier side this time. The difference between these kinds of processes is helpful to
understand the relationships between the different standards in this space (Mili et al., 2010).
Figure 4.3 – The collaboration process (Mili et al., 2010).
41
4.2.4 Business Process Diagram (BPD)
BPMN provides a set of notations for modeling business processes. The four main groups
defined in the standard are: flow objects, which are events, activities, decision/union nodes
(split, join); connecting objects, which are sequences, messages and associations; swimlanes
(pool, lanes) and artifacts (data, annotation, groups) (Delgado et al., 2010). Among the most
important elements are flow objects, e.g. activities, events and gateways. The flow objects are
connected by connecting objects, e.g. sequence flows or message flows. Additionally, BPMN
models are structured by assigning flow objects to swimlanes and by adding artifacts, e.g.
annotations, to connecting objects or flow objects (Effinger et al., 2009). A pool represents a
process participant which is a business entity (enterprise, section) or a business role (seller,
buyer), and a lane in a pool is a sub-partition used to organize activities (Delgado et al., 2010).
For example, when we are modeling supply chain business process, the pool can be ever entity
in the chain (Retailer, Distributor, Manufacturer, supplier) and the lane the departments of each
entity (Sales, Marketing, Accounting, Production, Quality Control, Logistics, etc.).
(Hernández, Álvarez Rodríguez, & Martin, 2010) based on the Object Management Group
(OMG) BPMN presented the following definitions for the notation elements:
i. Event – is something that ―happens‖ during the execution of a business process. In

order for an event to ―happen‖ there must be a cause (Trigger), as a consequence there
is an impact (Result). The event can be start, intermediate and end.
 Start – indicates the starting point of a BPD. For example, in supply chain, the
process can start with customer demand.
 Intermediate – occur between a Start Event and an End Event. They will affect
the flow of the process, but will not start or (directly) terminate the process
((OMG), January 2011).
 End – indicates the end of a BPD, and they are usually triggered when the last
step of the process has been completed.
ii. Activity – is a work that is performed within a BPD, it is carried out by a role (actor). An
activity can be atomic (task) or non-atomic (sub-process).
 Task (atomic) – is a work carried out by an actor in order to achieve an
objective.
 Sub-process (Non-atomic) – represents a set of activities (atomic tasks or
other sub-processes), gateways, and its sequence flow.
iii. Sequence flow – shows the order of execution of activities within a business process,
from start to end.
iv. Gateway – depicts the control of divergence and convergence of the sequence flow of
the elements in a BPD. Can be parallel (AND), exclusive (XOR), inclusive (OR) or
complex.
 Parallel – represents the flow of parallel paths for the elements within a
business process without checking any conditions.
42
 Exclusive – represents alternative flows of the elements within a BPD. For a

given element of a BPD only one of the paths can be taken. A decision can be
thought as a question that is asked at a particular point in the BPD.
 Inclusive – represents a branching point where alternatives are based on
conditional expressions contained within outgoing sequence flow. However, in
this case, the True evaluation of one condition expression does not exclude the
evaluation of other condition expressions ((OMG), January 2011).
Fig. 4.4 illustrates the main relationship between core modeling elements in BPMN. To do it,
(Rodriguez, Fernandez-Medina, & Piattini, 2007) have created the class know as Business
Process Diagram (BPD) that allows to relate all BPD elements used to represent a specific
business process. Table 4.1 present and describes a set of elements in which the Business
Process Diagram (BPD) are based.
Figure 4.4 – Business process diagrams core elements (Rodriguez et al., 2007).
Table 4.1 Elements of a BPD.
Categorie Element Type Representation
Start
Intermediate
Events
End
Task
Flow Objects
Process
Activities
Sub-process
Exclusive
Gateways
43
Inclusive
Parallel
Complex
Normal flow
Uncontrolled flow
Conditional flow
Sequence Flow
Default flow
Connecting Objects
Exception flow
Message Flow
Association
Pools
Swimlanes
Lanes
Data Object
Airtfacts Group
Annotation
There are many notation elements in BPMN. But we must be aware that the objective of
Business Process Modeling is to provide a simple and adoptable model to business analysts.
The BPD must to be simples, not complex, and logically representing reality. Most business
process is modeled adequately with the elements showed in the Fig. 4.5. These elements help
understand how BPMN can manage the potentially conflicting requirement that BPMN provide
to depict complex business processes and map to BPM execution languages ((OMG), January
2011).
44
Figure 4.5 – core set BPMN elements

(http://www.bpmn.org/Samples/Elements/Core_BPMN_Elements.htm - 28-02-2011)
4.3 Unified Modeling Language (UML)

Unified Modeling Language (UML) (Booch, Rumbaugh, & Jacobson, 1999a, 1999b) is a visual
modeling language adopted as a standard for object-oriented modeling and design in software
development by the industry body Object Management Group (OMG). It was created mainly
based on three object modeling techniques and methods (Booch, 1994; Ivar Jacobson,
Christerson, Jonsson, & Overgaard, 1992; Rumbaugh, Blaha, Premerlani, Eddy, & Lorensen,
1991) that have been used in industry for many years (Liang, 2003). The UML standardizes the
notations but it does not dictate how to apply the notations (T. A. Pender, 2002) . The UML
includes specifications for nine different diagrams used to document various perspectives of a
software solution from project inception to installation and maintenance. The Component and
Deployment diagrams describe an implementation. The remaining seven diagrams are used to
model requirements and design (T. A. Pender, 2002). One way to organize the UML diagrams
is by using views. A view is a collection of diagrams that describe a similar aspect of the project.
Fig. 4.6 illustrates the complementary nature of the three views and the diagrams that make up
each view.
Figure 4.6 – Three complementary views or sets of UML diagrams (T. A. Pender, 2002).
To better understand this approach, Pender (T. A. Pender, 2002) gives an example based on
the process of applying for a job. According to him, when we interview for a job, you can find out
the job is about through a published description. A typical job description begins with a title and
45
a brief definition of the job, usually in paragraph form. This would be the static part of the job
description.
The job description is usually followed by a list of duties detailing what is expected of you in the
performance of this job. We could think of the listed items as demands placed on us throughout
the course of our job. This corresponds to the dynamic part of the job (T. A. Pender, 2002).
After getting job, there are often specific instructions on how to do our job (for example, policies
and procedures to follow). These are the functional details of the job, for example, how to
perform the job rather than what to perform (T. A. Pender, 2002).
In the Unified Modeling Language (UML), one of the key tools for behavior modeling is the Use
Case Model, originated from the Object-Oriented Software Engineering (OOSE) (Almendros-
Jimenez & Iribarne, 2005). In this research we just use the Use case Diagram and Class
Diagram.
4.3.1 Software systems modeling
Software Systems Methodology is described classically as seven-stage process of analysis

(Checkland, 1981), as summarized in Fig. 4.7. There are five stages associated with the so-
called real world thinking: two of them for understanding and finding out about a problem
station, and the other three for deriving change recommendations and taking actions to improve
the problem situation. There are also two stages (below the dotted line) concerned with systems
thinking, in which root definitions and conceptual models are developed. Each root definition
provides a particular perspective of the system under investigation. A conceptual model defines
activities necessary to achieve the perspective given in a root definition (Bustard, He, & Wilkie,
2000).
Figure 4.7 Checkland’s seven-stage soft systems methodology (Bustard et al., 2000).
A root definition, in general, identifies or implies six particular pieces of information, as

described in Table 4.2.
46
Table 4.2 – General components of a root definition (Bustard et al., 2000).
Components Meaning
Customers The beneficiaries or victims of a system
Actors The agents who carry out, or cause to be carried out, the main activities of the system
Transformation The process by which defined inputs are transformed into defined outputs
Weltanschauung A viewpoint, framework, image or purpose, which makes a particular root definition meaningful
Owner Those who own a system (have the power to close it down)
Environment Influences external to a system that affect its operation
4.3.2 Use cases and Use cases Diagram
The functional requirements of a software system can be captured and documented in use
cases, which determine the functional scope of the objects in the system (Anda & Sjoberg,
2005). Use case modeling was first presented as part of the Object-Oriented Software
Engineering (OOSE) methodology for software development (Ivar Jacobson, Ericcson, &
Jacobson, 1995). Use case modeling is concerned with system description. With use case
modeling, however, there are several levels of system that might be considered. Use case
analysis was developed initially for computing systems, but can also be applied to the
information system within a business, or to the business itself (Bustard et al., 2000). Use cases
are a fundamental starting point of object oriented analysis and design (Hilsbos, Song, & Choi,
2005).
The functional requirements of a software system can be captured and documented in use
cases, which determine the functional scope of the objects in the system (Anda & Sjoberg,
2005). The key concepts associated with the use cases model are actors and use cases. The
users and any other systems that may interact with the system are represented as actors. The
required behavior of the system is specified by one or more use cases, which are defined
according to the needs of the actors. Each use case specifies some behavior, possibly including
variants, that the system can perform in collaboration with one or more actors (Almendros-
Jimenez & Iribarne, 2005).
A use case is a description of system usage, documenting transactions or sequences of

interrelated events initiated by an actor. The complete functionality of the system from an
external perspective is described by the set of use cases thus developed (Bustard et al., 2000).
Use case diagrams show the interaction of the system with external entities, the so-called
actors and describe the functionality of the system as a black box, without revealing its internal
structure (Back, Petre, & Paltor, 1999).
Use case modeling is a requirement engineering techniques that similarly leads to the
identification of system activities, but is driven more by needs of the system‘s ―users‖ than those
47
of the system itself. According to (I. Jacobson, 1987) a use case is a sequence of transactions
in a system, whose task is to yield a measurable value to an individual actor of the system. In
the same reference it is said ―the set of use case descriptions specifies the complete
functionality of the system. There are many different definitions of use cases, but all of them
have their roots in Jacobson‘s or Cockburn‘s notation (Zelinka & Vranic, 2009). To (Arlow &
Neustadt, 2005), a use case describes a coherent functionality that provides some result of
value to a user. The main advantages one can get by creating use cases are (Back et al.,
1999):
 Capturing the externally-required functionality of the system.

 Identifying the different goals for individual actors.
 Identifying candidate objects for the problem domain.
 Gaining an understanding of the problem domain.
 Gaining an understanding of the proposed solution.
Another benefit of use cases comes from the fact they are accountable, i.e. they can act as a
contract between the users and the developers. Still, use cases also have a number of
shortcomings (Back et al., 1999):
 They are informal. This is an advantage at an earlier stage in the development process,
but later on, informal requirements can be easily misinterpreted.
 It is difficult, if not impossible, to check whether the system provides the functionality
expected by the actors. To put it in another way, it is difficult to ensure that the actors
can achieve their goals by using the system.
 They are essentially functionally in character, even though in UML, they are used to
develop object-oriented systems. There is a missing link between functional use case
diagrams and object-oriented class diagram.
There are six elements that make up the use case diagram: systems, actors, use cases,
associations, dependencies, and generalizations. Fig. 4.8 shows these elements.
Figure 4.8 Elements of a use case diagram (T. A. Pender, 2002).
48
(1) System: sets the boundary of the system in relation to the actors who use it (outside the
system) and the features it must provide (inside the system) (T. A. Pender, 2002).
(2) Actor: According to (Arlow & Neustadt, 2005), actors are roles adopted by external entities
that interact with the system directly. Typically, actors are user roles, but systems,
subsystems, or even time can all perform as actors. Each actor can participate in many use
cases and each use case can embrace several actors. It is often distinguished between
primary and secondary actors. Primary actors participate in a use case to satisfy their goals,
while secondary actors help the system satisfy goals of primary actors (Zelinka & Vranic,
2009). Users in the classic sense are people who use the system. But users can also be
other systems or devices that trade information (T. A. Pender, 2002).
(3) Use case: identifies a key feature of the system. Without the features, the system will not
fulfill the user/actor requirements. Each use case expresses a goal that the system must
achieve, and is named using a verb phrase that expresses a goal the system must
accomplish, for example, deposit money, withdraw money, and adjust account. Although
each use case implies a supporting process, the focus is on the goal, not the process (T. A.
Pender, 2002).
(4) Association: identifies an interaction between actors and Use Cases. Each association
becomes a dialog that must be explained in a Use Case narrative. Each narrative in turn
provides a set of scenarios that function as test cases when evaluating the analysis, design,
and implementation of the Use Case (T. A. Pender, 2002).
(5) Dependency: identifies a communication relationship between two use cases (T. A.
Pender, 2002).
(6) Generalization: defines a relationship between two actors or two use cases where one use
case inherits and adds to or overrides the properties of the other (T. A. Pender, 2002).
Other important term in use case diagrams is ―flow of events‖ – or simply just flows (known also
as scenarios). This represents every possible outcome of an attempt to accomplish a use case
goal (T. Pender, 2003). A flow is a sequence of interactions between an actor and a system.
The interactions start from the triggering action and continue until the goal is delivered or
abandoned (Ivar Jacobson & Ng, 2005).
According to (T. A. Pender, 2002), by defining use cases in this manner, the system is defined
as a set of requirements rather than a solution, i.e., the approach is not to describe how the
system must work but describe what the system must be able to do. The use cases describe
only those features visible and meaningful to the actors who use the system (T. A. Pender,
2002).
Use case relationships
After defining the system, actors, and use cases, is necessary to associate each user with the
system features through the relationships. Use case relationships are a part of the use case
description even though they are not explicitly present in most of the use case templates
49
(Zelinka & Vranic, 2009). UML offers two standard relationships between use cases called
include and extend.
Include relationship defines that a use case contains the behavior defined in another use case
(Object Management Group. OMG unified modeling language). The purpose of this relationship
is to reuse existing behavior or extract identical behavior. The behavior of the included use case
is simply inserted into the behavior described in the including use case (Zelinka & Vranic, 2009).
The extend relationship is a relationship directed from the extending use case towards the use
case being extended that specifies how and when the behavior defined in the use case can be
inserted into the behavior defined in the use case being extended (Object Management Group.
OMG unified modeling language). It is typically used to add optional or exceptional behavior
without making changes to the behavior described in extended use case, which is similar to
alternative flows (Zelinka & Vranic, 2009). The extend relationship is used in combination with
extension points, which are named places in the flow of events where additional behavior can
be inserted or attached (Meyer, 1997). Fig. 4.9 shows a use case diagram representing the
actor, use cases and their relationships.
Association notation is a line connecting an actor to a Use Case represents an association, as

shown in Fig. 4.9.The association represents the fact that the actor communicates with the Use
Case (T. A. Pender, 2002).
Figure 4.9 Example of use case diagram and their relationships (T. A. Pender, 2002).
4.3.3 Class Diagram
Class diagrams are part of the Unified Modeling Language (UML). Is one of six structure
diagrams of UML (Haug, Hvam, & Mortensen, 2010).The Class diagram is by far the most used
and best known of the object-oriented diagrams(T. A. Pender, 2002). The class diagram
illustrates the structural component of the system and clearly identifies the classes, interfaces
and their relationships within the system (António, 2008). According to (António, 2008), is the
ideal diagram to represent concepts, classes and data types of the static structure of the
system. Besides representing the concepts, the class diagram allows us to establish the
relationships between classes (António, 2008). In the real relational database design, the E-R
50
(Entity-Relationship) methodology is the most used (Chen, 1976). Simple concepts (entities and
relationships) enable an easy and intuitive modeling of real as well as abstract things and
producing a conceptual model that can be easily transformed into relational database scheme
by well-defined set of rules (Brdjanin, Maric, & Ieee, 2007).
The Class diagram represents classes, their component parts, and the way in which classes of
objects are related to one another. A class is a definition for a type of object (T. A. Pender,
2002). (Booch, 1994) defines a class as a description of a set of objects that share the same
attributes, operations, relationships and semantics (Booch, 1994). The Class diagram describes
object classes and their relations, and is the most commonly applied UML diagram, and
includes attributes, operations, stereotypes, properties, associations, and inheritance (T. A.
Pender, 2002):
 Attributes - describe the appearance and knowledge of a class of objects (T. A. Pender,
2002). Booch (Booch, 1994) defines an attribute as a named property of a class that
describes a range of values that instances of the property may hold. Attributes are
shown below the class name and each compound word should begin with a capital with
the exception of the first (e.g. produtionType). Some attributes will be mandatory, such
as title, while others are optional, e.g. videoClip (Vidgen, 2003).
 Operations – define the behavior that a class of objects can manifest (T. A. Pender,
2002). An operation is the implementation of a service that can be requested from any
object of the class to affect behavior (Booch, 1994). Operations are listed in the bottom
compartment of the class box (Vidgen, 2003), how is shown in Fig. 4.8 (left).
 Stereotypes – help to understand this type of object in the context of other classes of
objects with similar roles within the system‘s design (T. A. Pender, 2002). A stereotypes
represents a variation of an existing type of model element (e.g. a class or a relation)
(Haug et al., 2010).
 Properties – provide a way to track the maintenance and status of the class definition
(T. A. Pender, 2002).
 Association – is just a formal term for a type of relationship that this type of object may
participate in. Associations may come in many variations, including simple, aggregate
and composite, qualified, and reflexive (T. A. Pender, 2002).
 Inheritance – allows to organize the class definitions to simplify and facilitate their
implementation(T. A. Pender, 2002).
Classes represent things; relationships represent the connections between things (Vidgen,
2003). Generally, in UML there are five types of relationships between classes. These
relationships are association, aggregation, composition, generalization, and dependence
(António, 2008). The notation for the class elements and the most common relationship types
are illustrated in Fig. 4.8. In addition, a navigability arrow can be used to show the direction of
association, aggregation and composition relationships (Haug et al., 2010).
51
Figure 4.10 Elements of class diagrams (Haug et al., 2010).
Association – An association is a structural relationship between things showing that one can
navigate from the instances of one class to the instances of another (and possibly vice versa).
Associations are shown as solid lines that connect the same or different classes, and can be
read in two directions (Vidgen, 2003).
Figure 4.11 How to represent an association relationship in UML (T. A. Pender, 2002).
Aggregation – is a special type of association used to indicate that the participating objects are
not just independent objects that know about each other (T. A. Pender, 2002). Represents the
association that exists when an object contains other (António, 2008). The included class calls
component and the class that include call compound, or container (António, 2008). Aggregation
describes a group of objects in a way that changes how you interact with them (T. A. Pender,
2002). Aggregation is represented with a hallow diamond, how is illustrated in Fig. 4.10. In this
example, is shown a aggregation relationship between the class ―Team‖ and ―Player‖; players
are assembled into a team; but if the team is disbanded, the players live on (depending of
course on how well they performed) (T. A. Pender, 2002).
Figure 4.12 How to represent an aggregation relationship in UML (T. A. Pender, 2002).
Composition – is a special way of aggregation, with the restriction that the objects components
belong, in fact, the object compound (António, 2008). Is used for aggregations where the life
span of the part depends on the life span of the aggregate (T. A. Pender, 2002). The aggregate
has control over the creation and destruction of the part. In other words, the member object
cannot exist apart from the aggregation (T. A. Pender, 2002). Composition relationship is
represented by the solid diamond how is shown in Fig. 4.11. A book is composed of chapters;
the chapters would not continue to exist elsewhere on their own, they would cease to exist
along the book (T. A. Pender, 2002).
52
Figure 4.13 How to represent a composition relationship in UML (T. A. Pender, 2002).
Generalization – is the process of organizing the properties of a set of objects that share the
same purpose. Generalization relates classes together where each class contains a subset of
the elements needed to define a type of object (T. A. Pender, 2002). A generalization is
represented as is shown in Fig. 4.12. Reading of the Fig. is: apple, watermelon, and orange, are
three types of fruit; a red delicious is a type of apple, and an apple is a type of fruit (every red
delicious object is an apple object and every apple object is a fruit object) (T. A. Pender, 2002).
Figure 4.14 How to represent a generalization relationship in UML (T. A. Pender, 2002).
Dependence – the dependence relationships is used to describe situations in which a class

depends on the other. An example of a situation where it makes sense to apply a dependency
ratio is the description of the relationship with a class that is passed by parameter. The
dependence is an association that is represented dashed (António, 2008).
Finally, is illustrated a class diagram example that includes the relationships presented
previously (Figure 4.15). In UML classes are shown as rectangles. The class name should be a
noun or noun phrase and begin with a capital letter. Classes can represent tangible things, such
as the seats in a theatre, and intangible things, such as an account balance in an accounting
system (Vidgen, 2003).
53
Figure 4.15 Class diagram example (T. A. Pender, 2002).

Figure legend (T. A. Pender, 2002):
1. On the ―places‖ association between Customer and Order, the multiplicity of 1..1 means
that every Order must be placed by a Customer. An Order cannot exist on its own.
2. On the ―places‖ association between Customer and Order, some customers may not yet
have placed any orders while others may have been doing business with the vendor for
a long time. The Order multiplicity should be 0..*. But a Customer can use the order
number as a qualifier to look up a specific Order (qualified association), so the
multiplicity with the qualifier is 1..1.
3. An Order is constructed using one or more Line Items. Each Line Item includes
information like a price and any applicable discount. But every Line Item exists only as
part of an Order represented by composition and multiplicity of 1..1 on the Order. There
must be at least one item on the Order so the LineItem multiplicity is 1..*.
4. Each Line Item is associated with a specific Product (1..1). The Line Item refers to the
Product using a serial number as a qualifier (qualified association). A Product might not
ever be ordered, so the multiplicity on the Line Item end is zero to one (0..1). In other
words, a Product might not yet be associated with a Line Item.
5. An Order that is not filled completely will generate another Order that it refers to as a
backorder (role name) and that backorder is associated with the Order that generate it
(reflexive composition). Each backorder refers to exactly one other Order, its source
(1..1). But each Order may or may not generate backorders (0..*).
6. The Order is shipped to the Customer via a Customer Shipment. When the Order has
not yet been shipped, the multiplicity on the Customer Shipment is zero (that is, there is
no Shipment associated with the Order). When more than one Shipment is needed to fill
the Order (for example, the items are being shipped from multiple locations or are
restricted by shipping requirements), the multiplicity is ―many.‖ Hence the complete
54
multiplicity range is 0..*. A shipment may contain products from many orders, resulting
in an Order multiplicity of 1..*.
7. Customer Shipment is just one type of Shipment (generalization). Another type of
Shipment is the incoming Vendor Shipment referred to in the receiving process.
CustomerShipment and VendorShipment are specializations of Shipment and so inherit
all the properties of Shipment.
8. Many Products or no Products may be in a given Location (0..*). But in order for you to
record a Product into inventory, you have to assign it to a Location. So there will never
be a Product that is not associated with a Location. This requires a multiplicity of 1..1 on
the Location end of the association.
9. VendorProduct and CustomProduct are both types of Product (generalization),
specializations of the class Product. Both can be ordered and shipped. But
CustomProducts are configurations of VendorProducts and VendorProducts are
standalone items that are ordered and shipped independently, not in a configuration of
other Products.
10. It is possible to create custom products using VendorProducts; for example, a home
entertainment system might consist of a receiver, CD player, speakers, TV, and so on
(aggregation). Why is it aggregation and not composition? Because the
VendorProducts, like the CD player, may exist and be sold separately from the
entertainment system. The multiplicity on VendorProduct is 2..* because a
CustomProduct is only a logic entity made up of a combination of at least two
VendorProducts. A VendorProduct may be sold individually and does not have to be
part of any CustomProduct configuration (0..1).
The literature review in two previous chapter, three and four, serves to help the researcher of
this dissertation in understanding the core concept of two models that is developed in following
sections, LARG information model and LARG ANP model. Basically, the objective is to find the
tradeoffs of each tool and perceive how to apply the concepts acquired to LARG models
development.
The following chapters focus primarily on the development of those two models to support a
Lean, agile, Resilient, and Green SCM on automobile industry. For this purpose a case study in
automotive SC is presented in chapter 7.
55
56
Chapter 5 LARG Information System Models

5.1 Methodology
This study includes a theoretical development to build a LARG information model. This task is entered
in the field of software development. In software system modeling, systems requirements must be
identified previously to facilitate the system development planning. The question is why the necessity
of integrated information model? The first answer for this question is: offers SC managers an
integrated platform that supports the exchange of information/data in real time between all intervenient
of the system (supply chain). Another answer is that this platform helps overcome the problems of
interoperability that may exist if each entity has their particular information system. With this platform,
information is available to be consulted by any user system that has permission. With this information
platform there will be improved security and compatibility of data/information exchange. To this
purpose, it is used Business Process Modeling Notation (BPMN) and Unified Modeling Language
(UML) to build the information model required. In UML, two business diagrams are developed, use
case diagrams and class diagram. In BPMN, a Business Process Diagram (BPD) the aim is to provide
global view of the automotive supply chain, material, information and financial flows. The use case
diagrams represent the interaction between system and their users, i.e., the system requirements.
Summarizing, with the use cases diagram is intended to do a list of previous functionality of the
information platform to facilitate the class diagram design. If is known previously the functionality of the
system, the identification of classes to store the needed data will be more easy. With the class
diagram, the aim is to show the structural information components of the LARG information model and
identify the most important classes of each paradigm (lean, agile, resilient, and green) and their
relationships.
The main objective of this information system platform is to assist data/information exchange between
all the companies in the considered supply chain. There is a fictional ―super entity‖ that is responsible
for the supply chain management as a whole, seeking the SC performance improvement and SC
competitiveness. All LARG SCM practices are stored in LARG platform and the super entity can
classify them according to paradigm, degree of importance and degree of implementation. In the
LARG class diagram, there is a class ―LARG practices‖ where is stored information about all these
practices. The methodology for the LARG Information system design is shown in Fig. 5.1.
57
Figure 5.1 Methodology for LARG information system design.
With the design of information model is intended to provide a single information platform to assist
decision-making in the considered SC. An effective decision-making should be based on data
(reliable, real and transparent). However, if there is not a platform that meets global SC information,
decision making about SC as a whole will be more difficulty.
The design of the LARG information model includes the contributions of a Delphi exercise with a panel
of academics and professionals on automotive supply chain management. Firstly, a general business
process diagram, different use cases diagram and a general class diagram were developed with these
contributions. The class diagram development also has contribution of academics experts in database
system. These diagrams were discussed with the panel of academics experts in supply chain
management before their validation through a case study in focal firm. As is shown in Fig. 5.1, firstly is
developed a BPD that will assist the development of use cases diagram and class diagram. Based on
BPD developed, was identified with the professionals of focal firm the core data/information associated
to each organization/department to be represented in class diagram. At the same time, was identified
the previous functionality of the information system. Before developing the class diagram is necessary
to understand the purpose of the information system. The system requirements have to be previously
identified to facilitate the identification of data to be modeled. The previous identification of users also
helps to identify data associated to each one. To frame our general BPD to the context of automobile
industry, some process diagrams were consulted and discussed in focal firm, in order to identify the
core business processes, material, information and financial flow of an automobile SC. The validation
58
of the LARG information system diagrams was conducted finally in logistics department, through semi-
structural interviews.
Before developing the class diagram is necessary to understand the purpose of the information
platform. The system requirements have to be previously identified to facilitate the identification of
data to be modeled. The previous identification of users also helps to identify data associated to each
one.
5.2 The Business Process Diagram (BPD)

In this research, the BPMN is used because it offers a modeling technique that is quickly understood
by all users of the business, from business analysts that make drafts of the processes to technical
developers that are responsible for the technological implementation of those processes and finally
business people that will manage and control those processes. Moreover, it creates a standardization
that connects design with implementation of business processes.
The LARG Business Process Diagram will provide a holistic view of the supply chain in study, and
identify points where can exist interoperability problems, processes to be improved, data associated to
each entity and processes where the practices implementation influence the SC performance. Other
advantage of the BPD development is that it helps in identifying the information/data that is necessary
to model in LARG class diagram.
5.2.1 The proposed automotive SC BPD framework
The proposed automotive SC BPD describes and links a set of core business SCM processes in
automotive supply chain, including the three main entities on the supply chain considered in this study
rst rst
(1 tier suppliers, focal firm, and 1 tier distributors) and their respective departments. There are
three types of flows that are modeled: material, information, and financial flows.
In this phase, first is presented a global SC BPD containing only the entities considered is this
research (Fig. 5.2). With the automotive SC BPD we intend to give a global view of the automotive SC
core processes without going into details of what happens between departments. The global
automotive SC BPD is illustrated in Fig. 5.3. The complete SC BPD containing the processes that
occur within departments is shown in Fig. 5.4. Both diagrams developed include the three main
rst rst
entities level on the automotive supply chain (1 tier suppliers, focal firm, and 1 tier distributors).
These BPD developed will represent a powerful toll in stage of LARG class diagram development,
since allows identifying information/data that results from the SC business processes.
59
Figure 5.2 SC’s entities of study.
Each of these three entities level presented on Fig. 5.2 is modeled on the BPD by a pool. Within each
pool (entity), has been considered the most important departments of each entities, represented by a
lane, namely Sales, Design & Engineering, Purchasing/Logistics, Production, Quality control, and
Financial. In entity distributor is not considered the production department, since the production
processes are not relevant in this entity as far as the SCM is concerned.
Especially in this automotive SC we consider a ―Head Office‖ that is the main decision maker and
responsible for the market study, final product design (design and engineering), selection of suppliers
and distribute the final product to the finished good distributor. This entity will be represented by a pool
and its major departments are: marketing (market study), design and engineering, sales, distribution
and SC decision making. Is important to note that the producer/assembly company does not sales the
final product directly to final customers and finished goods distributor. This process is assured by the
Head Office. It means that any end user can make an order directly from the producer.
There are two types of suppliers on first tier. The first type is the traditional supplier that is responsible
for produce/buy the components necessary to supply the manufacturer line. The second type is a
logistic provider that is responsible for some pre-assembly and transportation of the components from
suppliers to focal firm (assembly). The logistic provider is considered as a supplier, so will be
represented as supplier‘s departments, by a lane. The core automotive business SCM process is
modeled according to the three types of flow that exists in the supply chain, physic (material),
information, and financial flow. In the first diagram, the financial flow is not represented as is shown in
Fig. 5.3. The process begins with the customer order placement and end when the final product is
received by the customer (distributor) that has requested the product.
60
Figure 5.3 Global automotive SC Business Process Diagram developed.
61
Based on customer demand and available stock, the distributor comes into contact with the super
entity. If there is agreement the order is placed. However the super entity has already made its annual
production plan and sends to manufacturer (focal firm). When there is a new order, is necessary to
adjust the production plan that is not possible if the manufacturer and component‘s supplier does not
have capacity. The manufacturer receive the production plan from the super entity and place order to
1rst tier suppliers to purchase the components necessary for the final product assembly. The delivery
of components is made in Just in Time (JIT) and Just in Sequence (JIS). The first tier suppliers buy the
raw material to produce the components and deliver to the manufacturer through logistic provider.
Sometimes is necessary some pre-assembly before deliver the components on manufacturer. This
activity can be done by a logistic provider. After receiving the components, the manufacturer makes
the assembly, test and deliver to the super entity distribution center. Lastly the distribution center
delivery the final product to the distributors. The supplier‘s evaluation is made by the manufacturer but
the supplier‘s selection is done by the super entity, based on the manufacturer report.
Inside each entity, each department has their specific task to be modeled. In sales department for
example, the main tasks are: manage customers list, manage customer orders, request credit
approval, after-sales service, and complaints managing. The market study department is responsible
for the market study and estimate the annual production. Design and engineering process is carried
out by the department of Design&Engineering in super entity but should involves more entities, namely
focal firm and first tier suppliers. These two entities have direct contact with production/assembly of
components/final product and can add some value in design stage. Purchasing/logistics department
has a set of core tasks, such as: control and update inventory level, plan purchasing, finished goods
shipment, shipment notification, supplier‘s evaluation, contact suppliers, and make orders. In
production department, the main processes are: material requirements planning, request material
needed, plan and scheduling production, send finished goods to quality control, and carrying out
maintenance. In quality control department, basically, the main tasks are: material
(components/finished goods) quality control, testing finished goods (cars), measure nonconformities,
send conform products to warehouse or production line. Processes like credit approval, invoice
sending, and payment/receiving are carried out by the financial department. Logistics provider is
responsible for transporting.
As is shown in Fig. 5.4, there are many processes in different departments/companies that are
associated. Basically, these associations represent the link in material/information/financial flow within
the same company or between two or more companies. Annotations has been used to represent all
the perform indicators that results from the SCM business process or some information important for
the ready of the diagram. Information as order date, Economic Order Quantity (EOQ), lead time,
material cost, number of returns, number of nonconformities, delivery date, inventory level, setup time,
maintenance cost, quantity reused/recycled, etc., are represented by annotations in automotive BPD.
Fig. 5.4 just shows part of the conceptual automotive BPD developed.
62
Figure 5.4 Stretch of the conceptual BPD developed.
63
The information flow is an important issue in the proposed automotive BPD. The availability of
information is crucial for the successful management of the supply chain and decision making. Thus,
all information must to be available and realistic in a given system/database. To design the database
system it is important that there are identified previously which data will be modeled. With the BPD is
possible to identify all the data that results of the supply chain business process. For example,
associated with the process ―order registry‖ and ―customer registry‖, we have important information to
save, such as: customer name, quantity ordered, order date, lead time, price of item, etc. Other
important information can be the number of nonconformities detected on the quality control process.
5.3 LARG Use Cases Diagrams

5.3.1 Identification of the actors of the system
The users of the LARG information system are the fictional ―super entity‖, suppliers, focal firm,
distributors or other external entities that have permissions. Different use cases can be created to
shows the interaction between the system and their users. The system users are all SC‘s entities
(managers) and a fictional ―super entity‖ that is the SC manager. They are the system users because
the system is modeled to assist their decision making and their information storage. Within each
company, there are many users, namely the employees of each department. Basically the system
users are all the employees of the different entities because they are the ones will work with the
system. All users should share the required information for an effective SCM. The function of others
users is to provide information, consult, update, delete, depending on their permissions. It is important
to define permissions for each user previously. For example, the focal firm cannot alter the annual
production plan or select suppliers. Also exist various types of users with various permissions: those
who can insert, alter and consult information, i.e., can perform any action on the system; those who
can only insert and consult information; and those who only can consult the information available.
In this research it is proposed the introduction of a fictional ―super entity‖ that is responsible to manage
the supply chain as a whole, seeking to make the chain more competitive and tries to find solutions to
satisfy the final customers within the context LARG. The challenge of this fictional ―super-entity‖ is to
make a collaborative management, improving performance of each entity without prejudice the SC
competitiveness. This ―super-entity‖ has an important function in managing the conflicts of interest that
may exist in the chain. Strategic decisions to enhance SC competitiveness should be performed by
him.
Especially in the SC in the case study, there is a ―super manager-Head Office‖ that is Volkswagen (in
Germany). In context of this study, this ―super manager‖ cannot be considered as ―super entity‖ since
he looks only for performance improvement in focal firm, distributors and not in other important level of
rst nd
the chain as 1 tier and 2 tier suppliers. Sometimes, performance in focal firm is not the desired
because entities in upstream do not have a good performance. The main challenge of the ―super
entity‖ is to seek the SC performance improvement and SC competitiveness. So, the information must
be available, actual, and consistent allowing better decision-making.
64
5.3.2 Use cases diagrams proposed
The use cases are created with the purpose of showing the potentiality of the system, i.e., the
managers need the LARG information platform for what. Several interaction scenarios (use cases) can
be created to illustrate the interaction between the system and their users. The use cases diagram
developed are divided into two groups: LARG use cases diagram and general use cases. LARG use
cases diagram are those that relate to the scope of Lean, Agile, Resilient or Green SCM. For example,
use cases diagram to know inventory level, degree of resilience, quantity of materials reused or
recycled of global SC or each entity in particular, capacity of each entity, number of disturbances
occurred, losses due to disturbances, demands not fulfilled, number of stop line, number of
nonconformities, number of demands fulfilled in time, can be considered as LARG use cases diagram.
Note that, to respond to these use cases diagram (requirements), is required a class diagram to store
data/information to be consulted and processed.
General use cases diagrams do not relate to any paradigm, such as: use case to registry and login,
generate annual production plan, consult information, supplier evaluating. Following is presented
some use cases relating to LARG paradigms, developed in this study.
Use case diagram 1: Registry and login – this is the first requirements of the system. It is not a LARG
use cases diagram but is necessary because all users must have a login to access the system.
Before, is necessary to registry and getting login and password. Only users with permission can log
into the system. In this use case, the user request a login, inserting the necessary data and wait for
the login (user and password). After receiving the login the user can do login and after logout. This
process is shown in Fig. 5.5. There is an especial case of generalization on use case ―get login‖ that
includes ―get user‖ and ―get password‖. For all the subsequent use case diagrams, is necessary to
login.
Figure 5.5 Use cases diagram to registry, login and logout.
65
Use cases diagram 2 (resilient UCD): calculate degree of resilience in SC (by super entity) – In this
UCD, the main actor is super entity. He will interact with the system to calculate a global degree of
resilience in the SC. Firstly, is necessary to define the criterion that will be used and a calculation
formula. After, is obtained data from the system, and selected the entities that comprise this
calculation. Finally, the system calculi the requested computation and shows the results. Note that it is
an important UCD, since allows understanding how resilient is the chain and the necessity of news
resilience strategies. Fig. 5.6 shows this use cases diagram.
Figure 5.6 Use cases diagram to calculate the degree of resilience in the chain.
Use cases diagram 3 (lean UCD): to know the number of line stop in focal firm (by super entity) – to
develop better strategies to avoid the stop of line, super entity can use the platform to know the
number of occurred stop in focal firm. With this information, is possible to estimate a cost (due to
interruption in production line). To this purpose, he needs to insert the ID of focal firm, define a period,
search for desired information and request computation of results. Figure 5.7 illustrates this use cases
diagram.
66
Figure 5.7 Use cases diagram to calculate the number of stop line in a given period.
Use cases diagram 4 (green UCD): to estimate the quantity of recycled in global SC (by super
entity/Head Office) - in this use cases diagram, the main objective of super entity/Head Office is to
have a perception about the quantity of materials recycled in a given period. It is necessary to search
the quantity of recycled in each organization in particular and after calculate the global value for the
SC. By comparing the quantity of each entity, it will more easy to develop specific strategies for the
company with low level of recycled. Fig. 5.8 shows this use cases diagram.
Figure 5.8 Use cases diagram to calculate the quantity of recycled in the SC.
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Use cases diagram 5 (agile UCD): number of demands fulfilled in time (By super user or focal firm) –
in this use cases diagram, the main user can be super entity or focal firm. This use cases diagram is
important for both. Firstly is defined the supplier that will be consulted. After getting order info of the
selected supplier is compared the data order date, lead time and date of delivery to find if order was
delivered in time. Finally is estimated the number of times that delivery occurred out of time. An entity
that has a high number of deliveries out of time means that is not agile. Still, this information can be
used to evaluate the suppliers. Fig. 5.9 shows this use cases diagram.
Figure 5.9 Use cases diagram to calculate the number of order fulfilled in time.
Use cases diagram 6 (LARG UCD): to calculate LARG performance (by suppliers/focal firm) – in this
use cases diagram, the main users are suppliers and focal firm. The aim of this use cases diagram is
to know how much their entity is LARG and develop some strategies to improve LARG performance.
For this purpose, the supplier/focal firm will insert their ID code, search for LARG indicators, access
and select the LARG indicators, define the calculate formulas, and finally calculate the LARG
performance. Fig. 5.10 shows this use cases diagram.
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Figure 5.10 Use cases diagram to calculate the LARG performance of a supplier or focal firm.
Use cases 7: SC performance measurement (by super entity) – in this use cases diagram the main
actor is the super user. The other entities managers can interact with the system for the same
purpose. To measures the supply chain performance, it is necessary some data that the system can
provide for this purpose. In this case, the super entity (or other entity interested in SC performance
measuring) must interact with the system how is shown in Fig. 5.11. Since the platform will be
available in web, any user can introduce the information that may be used by others. The first step of
this process is to search the list of SC entities and get the specific data necessary to measures each
KPI (cost, service level, lead time, and quality of product). Before the final measures, is necessary to
define the weights of each entity and each KPI.
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Figure 5.11 Use cases to evaluate the SC performance.
Use cases 8 (lean/resilient UCD): consulting and comparing the supplier‘s inventory level (by the
focal firm) – in this case, the focal firm or the super entity is interested in consulting and comparing the
supplier‘s inventory level to better develop their orders strategy. The steps to this use cases is to
search the supplier‘s list, get their inventory level, and after compare their inventory level, as is shown
in Fig. 5.12.
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5.12 Use case diagram to check supplier’s inventory level.
Use cases 9 (agile UCD): status order consulting (Super entity/customer) – sometimes is important to
know the order status. The use case diagram for this purpose is shown in Fig. 5.13. The procedure
here is: the entity interested in consulting the status order introduce the Order ID, access to the order
status, view the entity that placed the order, and can access to all order information.
Figure 5.13 Use case diagram to check order status.
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Use case 10: entity/order info managing: in this case the responsible for the system will interact with
the system, managing the entity or order information. When there is any alteration of data regarding
the entity or order, this information must be updated. In this use case diagram, the super entity can
insert information about new entity, remove an entity, or simply update the existing information. The
procedure to manage order info is the same. Fig. 5.14 shows this use case diagram.
Figure 5.14 Use case diagram to manage entity/order info.
Use case 11 (lean/resilient UCD): calculate the average inventory level in the chain – it is clearly a
LARG use case diagram. The average inventory level in the supply chain is important information to
the stakeholders, particularly the fictional ―super entity‖. With this information, the SC‘s responsible
can develop new strategies to manage the SC‘s inventory. In this use case diagram, the first step is to
search all entities that are inserted in the system. Following, is necessary to get the inventory level of
each entity, compare these inventory level, and finally calculate the average inventory level. Fig. 5.15
shows this use case diagram.
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Figure 5.15 Use case diagram to calculate the average inventory level in the SC.
Use case 12 (LARG UCD): estimate how lean/agile/resilient/green is the entity/SC – this use case
intends to estimate the performance of one entity or the supply chain according to a particular
paradigm. For example, if the objective is to evaluate the lean performance, the information to search
is about lean. If the objective is to evaluate the performance of one entity, after searching the entity
list, the entity desired is selected. Following, is obtained the paradigm indicators info and their values.
To calculate the paradigm weight, is necessary to select the KPIs that are included in measurement.
Fig. 5.16 illustrates this use case diagram.
Figure 5.16 Use case diagram to estimate how lean/agile/resilient/green is the entity/SC.
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Use case 13: estimate the LARG SC performance – this use case diagram is similar to previous. The
difference is that in this case the indicators are selected regardless being lean, agile, resilient, or
green. The super entity defines all indicators that are important for the measurement and estimate the
LARG SC performance. This use case is shown in Fig. 5.17.
Figure 5.17 Use case diagram to calculate the LARG SC performance.
Use case 14: supplier evaluating – one of practices in the supply chain management is the supplier
evaluating. Fig. 5.18 illustrates the way as the focal firm can evaluate their suppliers. The procedure
here is to search the supplier list, select the supplier to be classified, define the evaluation criteria, find
the weight for each criteria, calculate the rating and insert the rating in the system for others
stakeholders. In the evaluation criteria definition, the suppliers may be involved.
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Figure 5.18 Use case diagram to evaluate a supplier.
The LARG platform information system is complex and can be used for many purposes. In the
previous described use cases some possibilities were described. Still, the possible interactions
between the system and their users are endless. In Table 5.1 is summarized the core use case
diagrams developed in this research. Many others use cases diagrams can be created, according to
the user requirements.
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Table 5.1 Use cases diagram resume.
Identifier Designation Description Actors
UCD1 Registry and login The SC entities login into the automotive LARG SCM Entities/System
Information System to access the information
UCD2 Calculate SC degree of The super-entity will use information system to calculate Super-entity/System
resilience the degree of resilience of the chain
UCD3 Know number of interruption of The super-entity estimate how many times the focal firm Super-entity/System
production line in focal firm production line stopped in a given period
UCD4 Estimate quantity of recycled The super-entity will estimate a global value for Super-entity/Head
in SC materials recycled by comparing quantity of each entity office/System
UCD5 Estimate the number of Super-entity or focal firm will use the system to consult Super-entity/Focal
delivery out of time the number of out time delivery by a given entity. firm/System
UCD6 Calculate LARG performance Suppliers or focal firm use the system to calculate their Suppliers/focal
LARG performance firm/System
UCD7 Consult and compare Super-entity and suppliers use the IS platform to SE/Suppliers/System
suppliers inventory level consult and compare inventory level of each supplier
UCD8 Status order consulting Super-entity or customer use the IS platform to consult Super-
the status order; order processing entity/Customer
UCD9 Calculate average SC Super-entity need to know the SC average inventory Super-entity/System
inventory level level to make better decision and develop better
strategies
UCD10 LARG estimation Super-entity can use the IS platform to estimate how Super-entity/System
lean, agile, resilient, and green is the SC/entity
UCD11 Estimate the quantity of scrap The super-entity/Head office can access the system to Super-entity/Head
in global SC estimate the quantity of scrap resultant of the global SC office/system
UCD12 Calculate the number of Focal firm will use the system to know how many Focal firm/system
nonconformities detected in nonconformities has been detected in a given supplier
deliveries delivery
UCD13 Estimate the number of Suppliers and focal firm can use the system to know the Suppliers/focal
recyclable pallet used to quantity of recyclable pallet are used in material firm/system
delivery materials delivery
UCD14 Estimate the consumption of Suppliers and focal firm can use the system to estimate Suppliers/focal
hazardous/toxic materials the consumption of hazardous/toxic materials in their firm/system
entities
UCD15 Estimate the energy Suppliers and focal firm can use the system to estimate Suppliers/focal
consumption the energy consumption inn their entities firm/system
UCD16 Estimate the recycling Focal firm and Suppliers can use the system to know Focal
workplace materials the quantity of materials recycled in workplace firm/suppliers/system
UCD17 Estimate the number of LARG Super-entity or Head office will use the system to know Super-entity/Head
practices implemented in each the LARG practices implemented in each entity office/system
entity
UCD18 Estimate the air emissions in Super-entity will use the system to estimate the air Super-entity/Head
global SC emissions in all SC entities office/system
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UCD19 Estimate the number of Super-entity and entities can use the system to know Super-entity/focal
accidents in focal firm or how many accidents occurred in a given period firm/suppliers/system
suppliers
UCD20 Estimate the customer reject Suppliers can use the system to know the focal firm Suppliers/system
rate reject rate
UCD21 Estimate the delivery speed Suppliers, focal firm and logistics provider will use the Suppliers/focal
system to estimate the speed on delivering products firm/logistics provider
UCD22 Estimate the obsolescence Suppliers and focal firm can use the system to know the Suppliers/focal
cost cost of obsolescence in their entities firm/system
UCD23 Consult the setup time in focal The super-entity can use the system to consult the Super-entity/focal firm
firm setup time in the focal firm system
UCD24 Consult the capacity of each To define the annual production plan, the super-entity Super-entity/Head
entity and Head office will use the system to consult the office/system
capacity of each entity
UCD25 Calculate the number of To define better resilience strategies the super-entity Super-entity/Head
occurred disturbance in global and Head office can base on the number of disturbance office/system
SC occurred in global SC or on a given entity
5.4 The Lean, Agile, Resilient, and Green Class Diagram

LARG platform modeling requires some perception about supply chain management fields and each
paradigm. Information about orders, purchasing, delivery, production, maintenance, quality control,
distribution, inventory management, material reused/recycled, needs to be stored. For example, when
an entity makes an order, important information are EOQ (Economic Order Quantity), lead time, order
date, entity that makes the order and entity that receives the order. Regarding to lead time, order date,
date of delivery, we can evaluate the agile paradigm for example. By comparing these indicators it is
possible to evaluate the agility on responding the customers demand. In quality control, the
information relevant is the number of nonconformities detected in raw materials and finished goods.
This is green information but can be lean information because nonconformities can result on waste,
representing cost. For lean paradigm, some important information can be production cost, inventory
cost, maintenance cost, quantity of resources, etc. Finally, for resilient paradigm, information about
disturbances is necessary to assess how resilient is the entity/chain.
The proposed class diagram represents the structural information components of the LARG platform,
and identifies the most important classes of each paradigm (Lean, Agile, Resilient and Green). The
class diagram development methodology was to identify firstly the classes and their attributes with the
contributions of academics experts on SCM and database system, and after finding their relationships.
The methodology to identify the classes was to find which information are suitable to support LARG
SCM, where many of those classes relate the three types of flow in the SC (material flow, information
flow, and financial flow) Firstly was developed a general class diagram and after validated with
professionals of logistics department in focal firm, through a case study. The conceptual class diagram
for the LARG SCM system is shown in Fig. 5.19.
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Figure 5.19 The Conceptual Class Diagram
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5.4.1 Core Lean, Agile, Resilient, and Green classes and attributes
On the proposed LARG class diagram, the core classes identified to support LARG SCM are: entity,
product, department, order, invoice, payment, employee, disturbance, order state, nonconformity,
returns, reused/recycled, delivery/shipment, accidents, environmental action, fines/penalties,
complaints, procurement, project, fairs/workshops (events), and transport vehicle, LARG practices and
paradigm type. There are some classes that represent one or more paradigm and others that have no
impact on the four paradigms.
The class ―entity‖ represents the various entities in the chain. This class has been considered instead
having a class for manufacturer, supplier, and distributor. In this class is possible saving information
about lean, agile, resilient, and green paradigm. The core attributes of this class are: entity ID (unique
entity identifier), designation (company name), type (depending on the level of the chain), capacity
(installed), energy consumption and air emissions (important to assess lean and green performance),
number of employees, hazardous and toxic material output. Capacity and energy consumption are
lean attributes because allows to evaluate the cost; energy consumption is also a green attribute, as
air emissions and hazardous/toxic material output. These are clearly environmental attributes; the
attribute number of new product introduction, relate the agility of a company on responding to market
needs, so is an agile attribute. Capacity is also a resilient attribute since allows to evaluate the
capacity of a company to respond to unexpected occurrences.
―Disturbance‖ class is necessary because allows to save relevant information about the disturbance
that occurs in the chain, and offers managers relevant information to define better resilient strategies.
The main attributes in this class are: disturbance ID, description, date of occurrence, duration, source,
severity, duration of effect, disruption periodicity, disruption quantity loss, disruption location.
Disruption periodicity is the interval between the disruptions; disruption quantity loss is the difference
between what an entity normally provides and which has been providing due to disruption; disruption
location refers to where in the upstream supply chain the disruption event occur (disruptions can occur
at the first, second, or third tiers of the chain). This class will be related to the entity class with a
relationship many to many, i.e., an entity may have zero or more disturbance, and a disturbance can
affect zero or more entities. Is not required that a disturbance affect an entity, i.e., if there are a
contingency plan the entity may be not affected.
The class ―Product‖ is other crucial class in the proposed class diagram. All companies have one or
more products/services to satisfy customers‘ orders. Thus is related to the class ―Entity‖ with a
relationship many to many, meaning that an entity may produce/sell one or more product and the
same product can be produced by one or more entity. Is required that a product has a producer and a
product does not exist if no exists a producer. The core attributes of this class are: product ID
(identifier unique of each product; should not have two or more product with the same ID),
designation, unit price, unit cost, inventory level, safety stock, model, and mark. Unit cost, inventory
level, and safety stock are lean attributes since offers information about cost. Inventory level and
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safety stock are too resilient attributes because can relate the capacity of a company to respond to
unexpected disturbances.
Associate to the class ―Product‖, exists the class ―Lot‖. The relationship is many to one, i. e., a product
belongs to one lot and one lot may have many products (same products). The main attributes on this
class are: lot ID, production date, production type (to stock or to order), and number of defects. This
last attribute is clearly a lean and green attribute in simultaneous. When the number of defects is high,
this represent a greater cost (lean) and more waste (green).
In ―Delivery‖ class, it is possible to save all information about all shipment that process in the SC. It is
clearly an agile class because from this class is possible to measures the delivery performance and
evaluate the capacity to respond to the demands changes. The core attributes of this class are:
delivery ID, delivery date, delivery quantity, and delivery place. By comparing the delivery date and
delivery quantity with planned, is possible to evaluate the entity compliance rate. These two attributes
can be lean and agile at the same time. If the delivery occur outside of the time, this represent cost
and if occur in time planned mean that the entity is agile in responding to customers demands.
When a delivery is carried out, there may have some returns. That is why has been considered the
class ―Return‖, allowing to save information about all returns that occur in delivery order. Thus this
class is related to class ―Delivery‖. The main attributes of return class are: return ID, description,
quantity, and reason. The attribute ―quantity‖ returned represent lean and green attribute because may
represent cost or waste.
Usually when there are some returns, is due nonconformities. So, is necessary to create and
associate the class ―Nonconformities‖ to the class ―Returns‖. Nonconformities class can be lean and
green class. Their main attributes are: nonconformity ID, type, quantity, quantity acceptable, and
destination. The attribute ―quantity‖ represents lean and green attribute because it translates into cost
and waste.
Other class associated to ―Return‖ class is ―Reused/Recycled‖. When there are some returns, is
important to decide what do with the returned item. To save information relating to the issue, there are
considered the class ―Reused/Recycled‖. The core attributes on this class are: material ID, description,
quantity (reused/recycled), and cost (of reuse/recycle). These two last attributes are clearly lean and
green attributes.
Classes such ―Fines/penalties‖, ―Events‖, ―Accidents‖, and ―Transport vehicle‖, have been included on
the proposed class diagram because there is possible to save important information on lean and
green paradigms. Attributes such fines/penalties value, accident rating, and cost of event can
represent lean and green attributes. On ―Transport vehicle‖, there are an agile attribute: flexibility of
vehicle.
In the proposed LARG class diagram, there are some classes that do not represent any paradigm,
such as: Invoice, payment, and employee. They are integrated in class diagram to complete the
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supply chain business process. For example, invoice and payment class are important to save
financial information.
Note that there are considered two especial classes in LARG class diagram: LARG practices and
paradigms type. A set of LARG practices will be saved in LARG platform and classified according to
the respective paradigm. These practices are implemented by different entities in the chain. An entity
can implement one or more practices and one practice can be implemented by one or more entities.
Therefore, the relationship between classes entity and LARG practices is many to many. The class
―LARG practices‖ has two important attributes: degree of importance and degree of implementation.
These two attributes allows compare degree of practice implementation between two or more entities.
The same practice can have different degree of importance in different entity. Related to class ―LARG
practices‖ is the class ―paradigm type‖. Each of those LARG practices can be classified in lean, agile,
resilient or green paradigm. One practice can belong to one or more paradigm and one paradigm
contains various practices. The aim of LARG practices implementation is to improve the value of the
LARG KPIs. These KPIs are represented on the different classes in the LARG class diagram, so there
is not a direct relationship between the class ―LARG practices‖ other classes and their attributes.
5.5 Contribution of Information Modeling to Improve LARG SCM

Performance
In this chapter has been proposed an integrated platform information system to support LARG SCM.
Using this platform the entities can share information to improve their SC performance. Information
sharing through the use of Information Technology (IT) is crucial for effective supply chain
management, but the simply use of IT applications is not itself enough to realize the benefits of
information sharing. Also, if each entity has its platform, the information sharing will be more difficult
and the lack of compatibility problem will be present. The proposed platform intends to eliminate this
problem, ensuring a safe and easy exchange of information.
This platform can be used by any entity on the supply chain. The main decision maker is then the
super user, thus the main objective is to ensure him reliable and real data to perform their decision-
making. The data stored on the platform is used to evaluate the supply chain performance in LARG
context, by comparing the results of each company, obtained from perform indicators established
previously. By comparing KPIs values from different periods, the super user can evaluate the effect
LARG SCM practice implementation and identify measures to be improved.
The main barrier to this platform consists on the interoperability problem. There is some
data/information that entities are not able to share because of privacy issues. The other question is
how each company uses the platform to insert the information.
One of interoperability problems may be related to the practice implementation. This problem occurs
on the practices that involves two or more entities (interoperable practices). Each practice has an ID
and description as attribute. If the description is the same, it helps to overcome the semantic
problems. Other problem of interoperability is the lack of compatibility that exists between the systems
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of each entity. For example, a problem that may exist is the problem of label and of inventories
counting. The same product may have a code in the system of suppliers and other different in
customers system. If exists a single platform this problem will be exceeded and the exchange of
data/information is more effective and transparent.
Other important contribution of LARG platform system is that offers an extensive list of LARG practices
to be implemented in different level of the chain. The selection of best practice is made according to
LARG ANP model proposed in following chapter. The selection of best practices is done to improve
the value of macro indicators (cost, service level, time, quality of product) and metrics (designated in
this research KPIs). By combining values of a set of metrics stored in platform system is possible to
calculate a value for each macro indicators. Regarding to metrics values, the managers can select the
most appropriate paradigms to improve these values. Then LARG platform serves essentially to
facilitate the data/information exchange between entities and assist decision making in selecting best
practices, KPIs and paradigms performed by LARG ANP model presented in next chapter.
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Chapter 6 LARG ANP: A Proposed Conceptual Model

The goal of this section is to propose a conceptual decision making model to assist SC‘
managers to select the best automotive LARG SCM practices in order to improve performance.
There are a lot of models for decision making but on this research, Analytical Network Process
(ANP), introduced by (Thomas L. Saaty, 2001) has been selected.
To achieve SC competitiveness, four management paradigms have been proposed in this

research. In this research the selection of LARG practices and KPIs has been based on the
identification of the most appropriate practices and KPIs in the automotive SC context. Firstly, is
outlined a list of LARG practices (Annex 1), based on the literature (S. Azevedo & Machado,
2009; Susana G. Azevedo et al., 2010a; Susana Garrido Azevedo et al., 2010; Helena Carvalho
et al., 2010), and then separated the practices by paradigm. To validate the LARG
practices/KPIs identification a two-round Delphi exercise was conducted with 20 academic and
professional experts. These experts identified the most appropriate LARG practices/KPIs in the
context of automobile SC.
In order to select the best LARG SCM practices, a conceptual ANP model is proposed in this
dissertation. Due to the mutual dependencies, inner dependencies and feedback effects on
some clusters, the ANP can be used to systematically evaluate the most suitable LARG SCM
practices. The traditional AHP method, also introduced by (R. W. Saaty, 1987) was not used
because is not suitable for the problem under study. The AHP neglects the mutual effect of
different conflicting levels in the SC network. The ANP, tolerates complex interrelationships
between the criteria and decision levels and deal with dynamic problem (Tuzkaya & Onut,
2008). Thus, the LARG SCM practices selection problem can be effectively modeled by the
judgments given by a set of enterprises managers in order to make better decisions in SC.
6.1 Why ANP?

Supply Chains are structured networks involving suppliers, manufacturers, distributors, retailers,
and final customers. Within the Supply Chain there are complex decision-making involving all
the actors with the overall objective of turning supply chains more competitive. Within this
research work the main objective is to examine the potential of ANP model in helping managers
to select the Lean, Agile, Resilient and Green best practices to be implemented. ANP was
selected because of its ability to deal with mutual dependencies, inner dependencies, and
feedback effects on some clusters that exist for systematically evaluating the most suitable
LARG SCM practices. Indeed, (i) supply chains are complex networks with feedback and
interdependence relationships between and amongst their actors; (ii) some KPIs and Practices
can be used by one or more actor in the same or different ways at different level of the supply
chain; (iii) some Practices can have direct influence on one or more enabler criteria (Cost,
Service Level, Time, Quality of product); (iv) practices may have contradictory results.
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Occasionally, in order to be Leaner, an entity must be less Resilient - for example, if the practice
is ―reduction of inventory level‖, the entity will be leaner (reduction of inventory cost) and less
resilient (no inventory stock to respond to a possible disruption); (v) there are some loops within
the elements of the same clusters, for example in criteria cluster.
6.2 LARG ANP Methodology

The first step on the LARG ANP development is determining the clusters that comprise the
network. Two particular cases of these clusters are ―Alternatives‖ (LARG practices) and
Subcriteria (KPIs). Literature review suggests many LARG practices and KPIs, but on these
two clusters, (Thomas L. Saaty, 2001) suggests maximum nine elements. Thus, is necessary to
select the core LARG practices and KPIs implemented on SC under study. To select LARG
practices to comprises the model, is considered two publications (Susana G. Azevedo,
Carvalho, & Machado, 2011; Helena Carvalho, 2011) by identifying the practices with a higher
degree of implementation and rating. Due to limitations in obtaining answers from SC‘
managers, in comparing nine practices and nine KPIs, it was necessary to further simplify and
select the top three ranked practices and KPIs in order to reduce the number of pairwise
comparisons. For example, if there are nine practices and nine KPIs, the number of pairwise
comparisons for each dependency would be 351. The top LARG practices selected are: (P1)
strategic stock; (P2) systems for rapid response in case of emergency and special demands;
(P3) reuse materials and packages. The LARG KPIs selected are: (KPI1) inventory cost; (KPI2)
order fulfillment rates; (KPI3) responsiveness to urgent deliveries. The various steps involved in
LARG ANP model have been shown in Fig. 6.1
Determining the goal and the other network clusters
Determining the alternatives elements
Building the LARG ANP Network
Identification of relationships, feedbacks and

dependences
Supermatrix formulation and analysis
Determining the score for each cluster/element
Figure 6.1 Various steps in LARG ANP model
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In the application of ANP, software like, Ecnet, Super Decision, or mathematical program like
Excel, Maple, Mathematica can be used. We chose to use Super Decision developed by
William J. Adams of Embry Riddle Aeronautical University, Daytona Beach, Florida, working
with Rozazann W. Saaty.
6.2.1 Application of LARG ANP methodology
LARG ANP best practices selection is a multicriteria problem. The first step in LARG ANP
model is to construct the network by determining the clusters, elements and the relationships
between them. In this research, LARG ANP model for prioritizing best LARG SCM practices
comprises six clusters, as is shown in Fig. 6.2. Firstly is defined the main goal for LARG SCM
best practices selection that meets the requirements of the decision-makers. The main criteria
and sub-criteria are also identified at this stage by decision-makers. Following this identification,
it is important to determine the alternative LARG SCM practices that can be included in the ANP
model. Finally, the connection between the clusters is made.
Figure 6.2 ANP model to select LARG best SCM practices.
As is shown in Fig 6.2, all clusters are connected by eight dependencies, one feedback and one
inner dependencies. The main clusters are defined below:
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(1) Goal (SC competitiveness) – this cluster contains only one element as the statement of
the purpose for LARG SCM practice implies (i.e., refer to the objective of the SC). A
supply chain must be competitive to survive in the global market and compete against
other SCs.
(2) Criteria (enablers) – there are four main enabler criteria to assess the supply chain
performance that have been included as nodes of this cluster: cost, service level, time,
quality of product. The elements in this cluster represent the key enablers to achieve
SC competitiveness. Each enabler contributes to the evaluation of the SC‘s
performance, and a pairwise comparison is conducted between them in order to assess
the relative importance of the criteria with respect to the goal (SC competitiveness). The
connections to the goal cluster indicate that these four criteria will be used to evaluate
the SC‘s performance. There are an inner dependencies in this cluster due to following
the fact: if quality of product increases, the service level will increase and probably the
cost of product will increase too; if an entity makes delivery outside of time, the service
level will decrease and probably the cost increases too; if an entity introduces new
product with high frequency, the service level can increases, but the quality of product
can be not the desired; if a company respond rapidly and cost effectively to
unpredictable changes, the service level increases and the cost may increases too.
(3) Sub-criteria (KPIs) – this cluster contains a list of potential LARG KPIs that can be used
to measure the criteria of each of the enablers enablers. An inner dependency amongst
the elements of this cluster can be also included, meaning that there are some KPIs
that influence others. The three LARG KPIs identified in this cluster are: i) inventory
cost; ii) order fulfillment rate; responsiveness to urgent deliveries.
(4) Paradigms (LARG) – this cluster comprises four SCM paradigms: Lean, Agile, Resilient,
and Green. There can exist some inner dependency amongst elements of this cluster
but it is not represented on the model due to study simplification. For example, the Lean
paradigm requires low inventory level but the Resilient paradigm requires high inventory
level. Being lean, with low inventory level, an entity can be green. If inventory levels are
low, on the other hand, there will be fewer obsolete and/or out-of-date products.
(5) Stakeholders (Entities) – this cluster represents the three entity level considered in this
study, ―Supplier‖, ―Focal Firm‖, and ―Distributor‖. Is considered these to be the major
agents in the automotive SC. This is an important cluster, as these agents are central to
the decision-making process. Pairwise comparisons between these nodes can be
undertaken to assess which entity is more or less important to the LARG SCM
competitiveness. The connection with the practices/KPIs results from the fact that they
have been implemented/used by companies contributing to improve the KPI value, and
consequently the enabler‘s criteria. The same practice/KPI/paradigm can have different
degrees of importance at each level of the chain. The connection with Paradigms
cluster indicates that each entity can evaluate which paradigm is better.
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(6) Alternatives (LARG practices) – this cluster includes the set of LARG SCM practices
that can be implemented by the entities in the supply chain. The connection with Criteria
cluster represents the effect of LARG SCM practice implementation on the enablers‘
criteria. The three main LARG SCM practices used for SC‘s performance evaluating,
each with their own tradeoff and conflict, i) are strategic stock; ii) system of rapid
response in case of emergencies and especial demands, iii) reuse materials and
packages.
The arrows indicate relationships between elements in one cluster with elements in other
clusters. In the Criteria cluster, especially, there are inner dependencies, because the elements
within this cluster affect each other. Bidirectional arrow between Sub-criteria and Alternatives
indicates feedback between these two clusters. The KPIs are used to evaluate the influence of
practices implementation and the practices are implemented to improve the KPI values.
Validating the proposed conceptual LARG ANP model for selecting best practice/KPI/paradigm
to improve SC competitiveness will be achieved by means of a case study in a real world
automotive SC, presented in the next chapter.
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Chapter 7 Case Study: Autoeuropa VW

The main objective of this case study is to validate the LARG ANP model proposed in previous
chapter. The collection of data is conducted to this purpose. The validation of the proposed
conceptual LARG ANP model for measuring and improving SC performance is achieved by
development of case study in a real automaker, described below.
7.1 Volkswagen Group

The Volkswagen Group is one of the largest automakers in the world, with global
headquarters in the city of Wolfsburg, Germany. This Group operates 62 factories around the
world, and has 370.000 people involved on a daily basis in the production and/or delivery of
more than 26.600 vehicles per day of more than 30 different models and different brands. The
Volkswagen Group sells its products in over 150 countries and holds a top position in the global
car market.
7.2 Volkswagen Autoeuropa

Volkswagen Autoeuropa (Autoeuropa VW) is a manufacturing company belonging to
Volkswagen Group that works in Just in Time (JIT) system. It is located in the region of Palmela,
Portugal, and began their effective production in 1995. The products of Volkswagen Autoeuropa
are: VW Sharan (1995), SEAT Alhambra (1996), VW Eos (2006), VW Scirocco (2008), VW
Sharan (2010), and the new SEAT Alhambra. Is important to say that Autoeuropa VW is one
unit of production, i.e., does not sell the vehicles. In Portugal, who sells the vehicles are SIVA
(importer of the mark Volkswagen in Portugal – for VW Sharan and VW Eos) and Seat Portugal
(for SEAT Alhambra). VW scirocco is not sold in Portugal. The product design (car) is made in
Germany, on Volkswagen AG.
The installed capacity is 197,800 vehicles per year, operating in three shifts per day. On
average the production is 600 vehicles per day. VW Autoeuropa employed 3.207 people in
2010, with 2.000 these working at the industrial park in Palmela. The company has 671
suppliers (430 production suppliers and 241 logistics providers), of which 660 are European and
11, non-European – with the following geographical distribution: Portugal, Industrial Park (12);
Portugal, other locations (67); rest of Europe (581); rest of world (11).
The production volume in last year (2010) is: VW sharan (23229 units), VW Eos (22775 units),
VW Scirocco (45230 units) and SEAT Alhambra (10050 units). Most production is for external
market, in 2010 for example, only 1,3% of production was destined to Portuguese market. The
global sales volume of vehicles manufactured in Autoeuropa VW in 2010 was 1.646 (million €).
7.2.1 Data gathering for the model
In order to carried out the pairwise comparison between elements/clusters and determine the
Relative Importance Weight (RIW) of these elements/clusters, a team of professionals in
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Autoeuropa VW logistics department (the focal firm) was consulted. The objective was to profit
from their perception of the LARG alternatives practices with respect to criteria and subcriteria
targeting, SC‘ competitiveness. Data were gathered by means of semi-structured interviews in
order to be able to discuss any doubts or misunderstandings about the questions and answers.
Comprehensive questionnaires were used in this stage. Initially the objective was to involve
other stakeholders (distributors and suppliers) in order to obtain their views and pairwise
comparisons, but the accessibility to appropriate individuals among these stakeholders was
extremely limited, and so the attempt was abandoned. An example of questionnaires used in
this stage is presented in Annex 2.
Data were collected in logistics departments because such professionals are responsible for
managing the entire SC from the perspective of the focal firm, meaning that these are the
people who have insights into not only the focal firm, but also into distributors and suppliers.
Other reason is that the collections of data in other tasks of the MIT Project, which the
contributions were used in this thesis, were collected in the same department. So, the
consistency is safeguarded.
The stage of data gathering was the most difficulty on the LARG ANP model because there are
a lot of question to do. Often, the answers may not have time to respond calmly, so their
judgments may not be the desired. After the data gathering, comparisons were carried out by
the decision making team.
7.2.2 Pairwise comparison matrices between the elements and related weights
The next step is to conduct pairwise comparisons between clusters and elements. Pairwise
comparison matrices are made according to the decision makers‘ answers by using the
fundamental scale given in Table 3.1. The linguistic scale is used to compare two elements. The
question exploring the pairwise comparisons is: with respect to a specific factor, which of a pair
of factors is more important? After this question, is necessary to evaluate the degree of
importance of the factor more important in relation to less important. For example, regarding SC
competitiveness, which is more important, cost or service level? To what degree is the more
important criterion of greater importance than the less important criterion? Pairwise
comparisons are performed with respect to all the factors that have an impact on other factors
within their own cluster or other clusters of the LARG network. Thus, the factors in a cluster are
compared according to their influence on a factor in another cluster, to which they are
connected, e.g., all factors in the cluster Criteria are compared according to their influence on
the Goal cluster. To reflect interdependencies in the LARG network, pairwise comparisons
among all the factors that influence others are conducted and these relationships are evaluated.
As was done for the elements, the clusters that influence each other are pairwise compared to
represent the weight of each cluster on the model. Table 7.1 and 7.2 summarize the overall
information on pairwise comparisons, including all pairwise comparison matrices needed, the
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number of questions for each pairwise comparison matrix and an example question for each
pairwise comparison for the elements and clusters comparison respectively.
All pairwise comparisons were performed by the responsible of logistics department, in focal
firm.
Table 7.1 Overall information of elements pairwise comparison.

PairwComp of With respect PWC Total PWC Example PWC
to matrices
With respect to SC competitiveness, how much
1.Criteria
Goal 1 4(4 -1)/2 = 6 more important is cost when compared to
elements
service level
With respect to cost, how much more important
2.Criteria
Criteria 4 4*[3(3-1)] = 12 is service level when compared to quality of
elements
product
With respect to cost, how much more important
3.Subcriteria is inventory cost to measure cost when
Criteria 4 4*[3(3-1)/2] = 12
elements compared to responsiveness to urgent
deliveries
4.Subcriteria With respect to Lean paradigm, how much more
Paradigms 4 4*[3(3-1)/2] = 12
elements important is KPI1 when compared to KPI2
5.Subcriteria With respect to Suppliers, how much more
Stakeholders 3 3*[3(3-1)/2] = 9
elements important is KPI1 when compared to KPI3
To measure the influence of the implementation
6.Subcriteria LARG
3 3*[3(3-1)/2] = 9 of P1, how much more important is KPI1 when
elements practices
compared to KPI2
7.Paradigms With respect to Focal Firm, how much more
Stakeholders 3 3*[4(4-1)/2) = 18
elements important is lean when compared to agile
8.Practices To improve the cost, how much more important
Criteria 4 4*[3(3-1)/2] = 12
elements is P1 when compared to P2
9.Practices To improve the KPI1 value, how much more
Subcriteria 3 3*[3(3-1)/2] = 9
elements important is P1 when compared to P3
10.Practices With respect to Resilient paradigm, how much
Paradigms 4 4*[3(3-1)/2] = 12
elements more important is P2 when compared to P3
11.Practices With respect to Distributors, how much more
stakeholders 3 3*[3(3-1)/2] = 9
elements important is P1 when compared to P3
Total 36 120
As can be seen in Table 7.1, to carry out all LARG ANP pairwise comparison, would be
necessary 36 matrices and 120 pairwise comparisons. The number of matrices and pairwise
comparison would increase significantly if for example we increase the number of practices and
KPIs. For example, if we had nine practices and nine KPIs, we would have more 12 matrices on
the feedback connection between clusters LARG practices and LARG KPIs, more six for each
cluster. The number of pairwise comparison for each dependency would be: 9*[9(9-1)/2] = 351.
The cluster pairwise comparison is made whenever there is more than one cluster influencing a
given cluster. In LARG ANP model this situation occurs with three clusters: Criteria, Paradigms
and Stakeholders.
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Table 7.2 Overall information of clusters pairwise comparison.

PairwComp of With respect PWC Total PWC Example PWC
to matrices
Criteria cluster With respect to criteria cluster, how much more
Subcriteria 1 influential is Subcriteria cluster when compared to
cluster Criteria 1*[3(3-1)] = 3 LARG practices cluster
LARG practices Cluster
cluster
Subcriteria With respect to paradigms, how much more
Paradigms 1*[2(2-1)/2] =
cluster influential is Subcriteria cluster when compared to
cluster 1 1
LARG practices LARG practices cluster
cluster
Subcriteria With respect to stakeholders, how much more
cluster influential is paradigms cluster when compared to
Stakeholders
Paradigms 1*[3(3-1)] = 3 LARG practices cluster
cluster 1
cluster
LARG Practices
cluster
Total 3 7
In evaluating the SC competitiveness, Cost (C), Service Level (SL), Time (T), and Quality of
Product (QofP) were used as critical success factors. These four homogenous elements
(Criteria cluster) have a link to Goal cluster indicating the influence they have on the SC
competitiveness. Especially for Criteria cluster there are inner dependences, because the
elements in this cluster affect each other; and there are two scenarios of pairwise comparisons
in it. The first is with the Goal, to determine the relative influence that the criterion has in that
regard, and the second is with the element in the cluster itself. Table 7.3 illustrates the pairwise
comparisons between the four criteria with respect to Goal, judged by responsible of logistics
department.
Table 7.3 Criteria pairwise comparison with respect to Goal.
Goal (C) (SL) (T) (QofP)

Cost (C) 1 1/7 1/8 1/4
Service Level (SL) 7 1 1 7
Time (T) 8 1 1 7
Quality of Product (QofP) 4 1/7 1/7 1
As can be seen in Table 7.3, for example, Service Level (SL) is judged ―very strong‖ important
than Cost (C), ―equal‖ important than Time (T), and ―very strong‖ important than Quality of
Product (QofP). For each comparison matrix is necessary to derive the priorities of each
element to find the eigenvalue vector (ω) and calculate the consistency ratio (CR).
The algorithm to estimating ω used in this research is synthesized as follows (C. W. Chang et
al., 2009):
i. Sum the values in each column of the pairwise comparison matrix.

ii. Divide each element in a column by the sum of its respective column. The resultant
matrix is referred to as the normalized pairwise comparison matrix.
iii. Sum the elements in each row of the normalized pairwise comparison matrix, and divide
the sum by the n elements in the row. These final numbers provide an estimate of the
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relative priorities for the elements being compared with respect to its upper level
criterion. Priority vectors must be derived for all comparison matrices.
After this stage is necessary to calculate and assess the consistency ratio (CR). This ratio
measures the logical inconsistency of the judgments and is calculated as follow:
Where ―CI‖ is consistency index and ―RI‖ the random consistency index. CI (consistency index)
of a matrix of comparisons is given by:
Where λmax is the maximum eigenvalue and n is the matrix size. RI (random consistency index)
is given by Table 7.4.
Table 7.4 Random consistency index (Thomas L. Saaty, 2001).

n 1 2 3 4 5 6 7 8 9 10
RI 0 0 0,58 0,9 1,12 1,24 1,32 1,41 1,45 1,49
Inconsistency may be considered a tolerable error in measurement and should be less than 0,
10 (10%) (T. L. Saaty, 2001).
Table 7.5 shows the relative priorities for the criteria pairwise comparison matrix with respect to
the goal.
Table 7.5 Normalized criteria pairwise comparison matrix with respect to the goal.
Goal ( C) (SL) (T) (QofP) Relative Weights
Cost ( C) 0,050 0,063 0,055 0,016 0,046

Service Level (SL) 0,350 0,438 0,441 0,459 0,422
Time (T) 0,400 0,438 0,441 0,459 0,434
Quality of Product (QofP) 0,200 0,063 0,063 0,066 0,098
Sum 1 1 1 1 1
As can be seen in Table 7.5, the criterion ―Time‖ is more sustainable in achieving SC
competitiveness with a score 0,434, followed by criteria ―Service Level‖ with score 0,422 and
Quality of Product (0,098). The criteria Cost has a low score (0,046) because the parameter is
mainly controlled by Volkswagen headquarters in Germany, and the people in Autoeuropa VW
do not recognize it as their main criterion. Also is Volkswagen that selects, for example, to
which suppliers the focal firm should buy the components and at which cost.
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To calculate the consistency index (CI), the normalized matrix has to be weighted. The resulting
priorities vector is used to this purpose. The first element of this vector is multiplied by all the
elements in the first column of that element, the second by all the elements in the second
column and so on. To find the consistency vector, is necessary to sum the weighted elements in
each row and divide it by the relative weights. Table 7.6 shows the weighted matrix with the
consistency vector.
Table 7.6 Weighted criteria matrix and consistency vector.
Goal (C) (SL) (T) QofP Sum Relative Weights Consistency vector
Cost (C) 0,046 0,060 0,054 0,024 0,185 0,046 4,022
Service Level (SL) 0,322 0,422 0,434 0,684 1,863 0,422 4,415
Time (T) 0,368 0,422 0,434 0,684 1,909 0,434 4,394
Quality of Product 0,184 0,060 0,062 0,098 0,404 0,098 4,133
The maximum eigenvalue (λmax) is given by the average of the values of the consistency vector.
In this case, λmax is 4,241. The matrix size (n) is 4. The consistency random index (for n = 4) is
0,890. So the consistency index (CI) is given by:
The desired value of ―CR‖ is less than 0,10, so the judgment in this matrix is consistency. Fig.
7.1 shows the computation results for this pairwise comparison matrix. As can be seen the
results from the super decision software is very close to excel. Fig. 7.1 shows the relative
priorities of criteria comparison with respect to ―Goal‖, obtained on Super Decision Software.
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Figure 7.1 Priorities for criteria comparison with respect to “Goal”, obtained on Super Decision.
By comparing the three sub-criteria (KPIs) based on each criterion, respondents were asked
which KPI is more suitable to measure a given criterion. For example, to measure the SC cost,
which KPI is preferred: Inventory cost or Responsiveness to urgent deliveries? As there are
three KPIs, three pairwise comparisons are needed for each criterion (four matrices), totaling
twelve (12) questions. Table 7.7 shows the sub-criteria pairwise comparison matrix with respect
to Cost. Table 7.8 summarizes the priorities for the pairwise comparison matrices with respect
to Cost, Service Level, Time and Quality of Product respectively.
Table 7.7 LARG KPIs pairwise comparison matrix with respect to cost.
With respect to Cost IC OFR RUD Priorities

Inventory cost (IC) 1 1/7 1/5 0,078
Order fulfilment rate (OFR) 7 1 1 0,487
Responsiveness to urgent deliveries (RUD) 5 1 1 0,435
λmax = 3,013; CR = 0,0063
Table 7.8 LARG KPIs ranking with respect to each criteria.

Cost (C) Service Level (SL) Time (T) Quality of product (QofP)
Ranking Priorities Ranking Priorities Ranking Priorities Ranking Priorities
OFR 0,487 RUD 0,646 RUD 0,689 NC 0,000
RDU 0,435 OFR 0,290 OFR 0,244 NC 0,000
IC 0,078 IC 0,064 IC 0,067 NC 0,000
λmax 3,013 λmax 3,074 Λmax 3,096 λmax 0,000
CR 0,0063 CR 0,064 CR 0,082 CR 0,000
NC = No Comparison
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From Table 7.8, is possible to conclude that the KPIs ―Order fulfillment rate‖ and
―Responsiveness to urgent deliveries‖ score higher in measuring Cost, Service Level, and Time.
None of these three indicators are appropriate to measure the Quality of product, so they are
not comparable.
The next pairwise comparison matrix compares the cluster Sub-criteria (KPIs) with respect to
each stakeholder (entities). Here, the objective is to find which KPI is more or less important to
each entity. For example, with respect to the focal firm, which KPI is more suitable, ―Inventory
cost‖ or ―Order fulfillment rate‖? Table 7.9 shows the results of the pairwise comparison matrix
for the sub-criteria (KPIs) with respect to focal firm. Due to limitations on obtaining responses
from suppliers and distributors answers, only is presented the results for the focal firm.
Table 7.9 LARG KPIs pairwise comparison matrix with respect to focal firm.
With respect to focal firm IC OFR RUD Priorities

Inventory cost (IC) 1 1/5 1/7 0,074
Order fulfillment rate (OFR) 5 1 1/3 0,283
Responsiveness to urgent deliveries (RUD) 7 3 1 0,643
λmax = 3,066; CR = 0,056
Analyzing the results of this matrix, the most important KPI in the perspective of focal firm is
―Responsiveness to urgent deliveries‖, with a score 0,643. ―Inventory cost‖ continues to have a
low score because focal firm does make stock - working, instead on a Just in Time (JIT) system.
The next pairwise comparison is between the clusters Sub-criteria and Paradigms. Here, the
objective is to evaluate which KPI is more suitable in each paradigm. For example, with respect
to Lean, which KPI is more important, ―Order fulfillment rate‖ or ―Responsiveness to urgent
deliveries‖? Table 7.10 summarizes the priorities of pairwise comparison between these two
clusters.
Table 7.10 LARG KPIs ranking according to each paradigm.

Lean (L) Agile (A) Resilient (R) Green (G)
RUD 0,689 RUD 0,627 IC 0,455 NC 0,000
OFR 0,244 OFR 0,292 OFR 0,455 NC 0,000
IC 0,067 IC 0,081 RUD 0,091 NC 0,000
λmax 3,096 Λmax 3,095 λmax 3,000 λmax 0,000
CR 0,082 CR 0,082 CR 0,000 CR 0,000
NC = No Comparison
Looking at the results is possible to conclude that ―Responsiveness to urgent deliveries‖ is the
most important KPI for Lean and Agile paradigms, followed by ―Order fulfillment rate‖. ―Inventory
cost‖ is not important in the Lean paradigm because there is required zero inventories. On the
contrary, in Resilient paradigm, ―Inventory cost‖ is the most important KPI together with ―Order
fulfillment rate‖. The KPI ―Responsiveness to urgent deliveries‖ is the least important, since
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urgent deliveries are only necessary in the event of a lack of inventories or the planed order is
not fulfilled.
To complete the pairwise comparison of Sub-criteria cluster, it is needed to compare this cluster
to the LARG practices cluster. Table 7.11 shows the priorities of pairwise comparison between
these two clusters.
Table 7.11 LARG KPIs ranking with respect to each practice.

Strategic stock SRR RMP
Ranking Priorities Ranking Priorities Ranking Priorities
IC 0,455 RUD 0,778 IC 0,778
OFR 0,455 OFR 0,111 OFR 0,111
RUD 0,091 IC 0,111 RUD 0,111
λmax 3,000 λmax 3,000 λmax 3,000
CR 0,000 CR 0,000 CR 0,000
Analyzing Table 7.11 is possible to conclude that ―Inventory cost‖ is the most appropriate KPI to
measure the influence of practices ―Strategic stock‖ and ―Reuse materials and packages‖ with
scores of 0,455 and o,778, respectively. On the contrary, it is the least important to ―System of
rapid response in case of urgencies and special demands‖ with a score (0,111). The best KPI to
measure the influence of this practice is ―Responsiveness to urgent deliveries‖, score 0,778.
As is shown in Fig. 6.2 the LARG practices cluster (Alternatives) is influenced by the cluster
Stakeholder making a pairwise comparison necessary between the alternatives (LARG
practices) with respect to each entity. For example, in the perspective of the focal firm, which
practice is more important to improve performance in given entity, ―Strategic stock‖ or ―System
of rapid response in case of emergencies and especial demands‖? Table 7.12 shows the results
of pairwise comparison.
Table 7.12 LARG practices pairwise comparison with respect to focal firm.
With respect to focal firm SS SRR RMP Relative Weights
Strategic stock (SS) 1 1/3 5 0,283
System of rapid response in case of emergencies (SRR) 3 1 7 0,643
Reuse materials and packages (RMP) 1/5 1/7 1 0,074
λmax = 3,066; CR = 0,056
According to the answers of the expert of the focal firm entity, the practice most important to the
focal firm is ―System of rapid response in case of emergencies and especial demands‖, with a
score of 0,643. Even though the focal firm does not work with inventories, some strategic stock
is nevertheless needed in order to respond to unexpected disruptive shocks. Hence, ―Strategic
stock‖ is the second most important practice to focal firm, with a score of 0,283.
Next, the pairwise comparison is between the cluster LARG practices and Sub-criteria (LARG
KPIs). This is a special relationship, as there is feedback between these two clusters. Thus, the
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pairwise comparison should be carried out in both directions. The first stage is to conduct
pairwise comparison between the three practices with respect to each KPI. The question here is
which practice is more suitable to improve a given KPI value, ―Strategic stock‖ or ―Reuse
materials and packages? Table 7.13 shows the ranking of these pairwise comparisons.
Pairwise comparison between the three KPI with respect to each practice is done.
Table 7.13 LARG practices ranking with respect to each KPI.

IC OFR RUD
Ranking Priorities Ranking Priorities Ranking Priorities
SS 0,455 NC 0,000 SRR 0,633
RMP 0,455 NC 0,000 SS 0,260
SRR 0,091 NC 0,000 RMP 0,106
λmax 3,000 λmax 0,000 λmax 3,039
CR 0,000 CR 0,000 CR 0,033
NC = No Comparison
The most important practices for improving ―Inventory cost‖ are ―Strategic stock‖ and ―Reuse
material and packages‖ (both with a score of 0,455). None of the practices is appropriate for
improving ―Order fulfillment rate‖, so there is no comparison. To improve ―Responsiveness to
urgent deliveries‖, the most important practice is ―System of rapid response‖ (score 0,633),
followed by ―Strategic stock‖ (score 0,260).
Pairwise comparisons between the clusters ―Criteria‖ and ―LARG practices‖ are then performed.
As is shown in Fig. 6.2 the Criteria cluster is influenced by the other entire cluster (LARG
practices), meaning that the alternatives practices are compared with respect to all criteria
(Cost, Service Level, Time, and Quality of product). The question is, for example: which practice
is more important to improve the criteria cost, practice ―Strategic stock‖ or ―Reuse materials and
packages‖? Table 7.14 illustrates the priorities of these pairwise comparisons.
Table 7.14 LARG practices ranking with respect to each criteria.

SS 0,665 SRR 0,739 SS 0,723 SRR 0,777
SRR 0,231 SS 0,179 SRR 0,206 RMP 0,155
RMP 0,104 RMP 0,082 RMP 0,070 SS 0,069
λmax 3,087 Λmax 3,102 λmax 3,096 λmax 3,082
CR 0,075 CR 0,088 CR 0,083 CR 0,071
To improve Cost and Time, the best practice is ―Strategic stock‖ (score 0,665), followed by
―System of rapid response‖ (0,231). If the company has some strategic stock, it will respond to
customer demand in less time and at less cost. Regarding Service level and Quality of product,
the practice most appropriate is ―System of rapid response‖ with scores of 0,739 and 0,777
respectively.
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The next pairwise comparison is between clusters Paradigms and LARG practices. The
question in this pairwise comparison is, for example: which practice is more important for lean,
―Strategic stock‖ or ―System of rapid response‖? Table 7.15 shows the priorities of these
comparisons.
Table 7.15 LARG practices ranking with respect to each paradigm.

Lean (L) Agile (A) Resilient (R) Green (G)
SRR 0,739 SRR 0,487 SS 0,689 RMP 0,818
SS 0,179 SS 0,435 SRR 0,244 SS 0,091
RMP 0,082 RMP 0,078 RMP 0,076 SRR 0,091
λmax 3,012 Λmax 3,013 Λmax 3,096 λmax 3,000
CR 0,088 CR 0,011 CR 0,082 CR 0,000
Analyzing the previous Table, the practice ―System for rapid response‖ (score 0,739) is more
Lean than both ―Strategic stock‖ (score 0,179) and ―Reuse materials and packages‖ (0,082).
Note that ―Strategic stock‖ is the second, only because is ―strategic‖. ―Strategic stock‖ may allow
minimizing Cost more than ―Reuse materials and packages‖. In the Agile paradigm, the most
important is also ―System for rapid response‖ with a score of 0,487. This is clearly an Agile
practice. ―Strategic stock‖ has a good score (0,435) when compared with ―System for rapid
response‖, meaning that if a company has some stock, it will be able to respond more quickly to
changes in demands. In the Resilient paradigm, the most important practice is clearly ―Strategic
stock‖ (score 0,689). The Resilient paradigm requires a high inventory level in order to respond
to unexpected disruptive shocks. In this paradigm, ―System for rapid response‖ (0,244) is more
important than ―Reuse materials and packages‖ (0,076). Finally, in the Green paradigm, ―Reuse
materials and packages‖ is the practice considered to be most important, with a score of 0,818.
Following, the pairwise comparison is between the cluster Paradigms and Stakeholders. The
issue here is to determine which paradigm is more important to a given entity, for example, with
respect to the focal firm, which paradigm is more important, Lean or Resilient? Table 7.16
shows the results of pairwise comparison between these two clusters.
Table 7.16 LARG paradigms pairwise comparison with respect to focal firm.
Focal firm (L) (A) (R) (G) Relative Weights
Lean (L) 1 1/5 1 5 0,171
Agile (A) 5 1 5 7 0,606
Resilient (R) 1 1/5 1,0 5 0,171
Green (G) 1/5 1/7 1/5 1 0,051
λmax = 4,212; CR = 0,079
According to the responses of the expert, the most important paradigm in the focal firm entity is
Agile, with a score very high relative to other paradigms (0,606). Lean and Resilient were
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considered to be of equal importance (0,171). The least important paradigm in the focal firm is
Green (0,051).
Figure 6.2 shows that there are inner dependencies in the cluster Criteria, meaning that are
needed pairwise comparison between the elements of this cluster with respect to his each
element. The question here is, for example: with respect to cost, which criteria influences more,
Service level or Time, Service level or Quality of product, Time or Quality of product? Table 7.17
summarizes the results for the inner dependencies pairwise comparison in the Criteria cluster.
Table 7.17 Criteria ranking of pairwise comparison with respect to each criteria.
QofP 0,746 QofP 0,467 SL 0,739 SL 0,633
SL 0,134 C 0,467 C 0,179 T 0,260
T 0,134 T 0,067 QofP 0,082 C 0,106
λmax 3,013 λmax 3,000 λmax 3,102 λmax 3,039
CR 0,011 CR 0,000 CR 0,088 CR 0,033
The criterion that influences Cost the most is ―Quality of product‖ (0,746), followed by ―Service
level‖ (0,134), and ―Time‖ (0,134). If the Quality of product increases, the Cost will increase too.
Hence, if a client is not satisfied or if the supplier does deliver on time, it can represent
additional cost. In Service level, the most important criterion is ―Quality of product‖ (0,467),
followed by Cost (0,467), and ―Time‖ (0,067), meaning that a client will be more satisfied if the
product has the desired quality than is cheaper on time. Looking at Time, the criterion that
influences it the most is ―Service level‖ (0,739), followed by ―Cost‖ (0,179), and ―Quality of
product‖ (0,082). In Quality of product, the most important criterion is ―Service level‖ (0,633),
followed by ―Time‖ (0,260), and ―Cost‖ (0,106).
After conducting all pairwise comparisons in the model, it was developed the comparisons
between clusters that influence a given cluster in order to establish the weights in a cluster
matrix, seeking to calculate the weight priorities of their impact on each cluster. Weights derived
from this process will be used to weight the elements in corresponding column blocks of the
supermatrix corresponding to the control criteria. Clusters pairwise comparisons show how
much clusters are influenced by each other. The process is the same when is compared the
elements. Whenever there is more than one cluster that influences a given cluster, pairwise
comparison is necessary. If there are not conducted this pairwise comparison, is assumed that
all clusters have the same weight. Fig. 7.2 illustrates the cluster matrix with the relative priorities
of all clusters pairwise comparisons, taken from the Super Decision software.
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Figure 7.2 Cluster matrix.
7.2.3 Supermatrix formulation and analysis
The values obtained from pairwise comparisons (in the preceding step) are used in the
formation of the supermatrix structure. This matrix shows a local priority vector derived from the
paired comparisons that represent the impact of a given set of elements within a component on
another element in the system (T. Saaty, 2004). The supermatrix represents the influence of an
element (on the left of the matrix) on another element at the top at the matrix. This matrix shows
the interdependency and relative importance of each previously-defined element. The initial
supermatrix must be transformed to a matrix in which of its columns sums up to unity
(Promentilla, Furuichi, Ishii, & Tanikawa, 2008). For this reason, this matrix must be normalized
using the weight of the cluster to achieve the unit columns (Özgen & Tanyas, 2011). In this way
it is possible to achieve the stochastic or weighted supermatrix (T. L. Saaty & Vargas, 1998,
2006a).
The supermatrix is computed in three steps (Pangeran & Pribadi, 2010): the first step is the
unweighted supermatrix created directly from all local priorities derived from pairwise
comparisons among elements influencing each other. The second step, the weighted
supermatrix is calculated by multiplying the values of the unweighted supermatrix with their
affiliated cluster weights. The last step is composition of a limiting supermatrix, which is created
by raising the weighted supermatrix powers until it stabilizes. Stabilization is achieved when all
the columns in the supermatrix corresponding to any node have the same values. All the steps
in LARG ANP model were conducted using Super Decision software. Fig. 7.3 –7.5 show the
unweighted supermatrix, weighted supermatrix and limit supermatrix respectively.
103
Figure 7.3 Unweighted supermatrix.
Figure 7.4 Weighted supermatrix.
Figure 7.5 Limit matrix.
7.2.4 LARG ANP model final priorities
After the limit supermatrix is achieved, the final task is to rank the elements in the LARG ANP
model based on its priorities. As the result of the model, Fig. 7.6 illustrates the final score for
each element considered. As can be seen, there are no inconsistency, meaning that all pairwise
comparisons are consistent.
104
Figure 7.6 Experimental final priorities for LARG ANP model.
7.2.5 Discussion of the results of the LARG ANP model
Fig. 7.6, illustrates that in the Autoeuropa VW case study the most important criteria for
achieving SC competitiveness is Service level, followed by Time, Quality of product, and finally,
Cost. This means that in Autoeuropa VW‘s market, it is the customer base that defines the SC
business process continuity. Customers‘ need is the most important factor, and these needs
must be met. Furthermore, if customers are completely satisfied, it may signify that cost, time
and quality of product are the desired. In sub-criteria cluster (LARG KPIs) the most important
indicator is Responsiveness to urgent deliveries, followed by Inventory cost and Order fulfillment
rates respectively. Responsiveness to urgent deliveries is in fact an important indicator in focal
105
firm because there are many cases of difficulties and exceptional demands. Although the focal
firm works in JIT, some ―strategic stock‖ must be kept on hand in order to prevent losses
resulting from possible SC shocks. Regarding paradigms, the most appropriate one is Agile (0,
020756), followed by Lean and Resilient (each with the same score of 0, 012323). Green is the
least important paradigm (0, 010153). Due to increasing changes in marketplace and customer
requirements, supply chains need to be increasingly Agile in order to gain competitiveness. The
agile paradigm is associated with speed in responding to changes in demand, and it is a
paradigm that is directly associated with customers. In today‘s business environment, customer
satisfaction is a key factor. From the results of the model, the Service level and Agile paradigm
lead the ranking, each one in their cluster, meaning that the results have some coherence. The
Lean paradigm is an important one, but it is not in the first place in the ranking. This is likely due
to the fact that of in an advanced SC, such as Autoeuropa VW, the processes are already
highly standardized and that it is often difficult to realize considerable improvement regarding
cost. However, processes that add no value must be continually eliminated. The Resilient
paradigm was considered to have the same importance as Lean. For the same reason, i.e., due
to standardization of SC processes, it is difficult to constantly address problems in the SC. The
Green paradigm is the least important because supply chains and their entities consider it as a
way to gain approval from the entities controlling the environmental impacts and society, and
efforts usually target little more than minimum requirements. Many of the ―Green‖ strategies that
firms adopt are in fact implemented with the aim of reducing costs, and not in response to
environmental issues or legislation.
Finally, for the LARG practices, ―System for rapid response in case of emergencies and
especial demands‖ was judged to be the most important, followed by ―Strategic stock‖ and
―Reuse materials and packages‖. Once again, it means that the results of the model are
coherent, because SRR is an Agile practice and contributes customer satisfaction. ―Strategic
stock‖ appears in second place in the ranking of practices, as in the Resilient paradigm. This
practice may also be considered as Lean only due to be ―strategic‖.
7.2.6 Advantages and limitations of LARG ANP model
The LARG ANP model developed in this research is revealed to be an interesting approach for
assist managers in decision-making with regard to Lean, Agile, Resilient and Green Supply
Chain Management. It is possible to conclude that it is a dynamic and flexible model, as it
allows practitioners to relate various factors at the same time and select the desired factor
according to other factors, as illustrated in the Autoeuropa VW case study. However, it presents
some limitations, derived mainly from the number of pairwise comparisons that are needed.
Respondents complained that reply to all pairwise questionnaires was excessively time
consuming and also that the process was mentally fatiguing. Another limitation is the (advised)
constraint to have no more than nine elements in a given cluster, meaning that should not be
compared more than nine practices and KPIs at the same time, which in turn implies an a priori
106
selection of elements. A final limitation is related to the lack of consistency that may appear in
pairwise comparisons. Judgments must then be reviewed by the respondent to solve this
problem.
107
108
Chapter 8 Conclusions and Recommended Future Work

Effective supply chain management is one of the keys to survival in a market that is increasingly
volatile and turbulent. In fact, the decision-making in selecting the appropriate
strategies/practices/KPIs is a daunting challenge to SC managers. A poor decision can threaten
the success of the chain. The LARG ANP model offers SC managers an excellent tool to assist
their decision-making by selecting the best practice, KPI, paradigm, or competitiveness
enablers.
This research attempts to cover the lack of an integrated information platform for lean, agile,
resilient and green SCM paradigms. The design of a LARG Supply Chain consists in a strategic
advance towards the global market but requires the ability to make decisions, adequate to the
structure of the business and its business partners. The main objective is to give SC managers
an integrated platform to assist the SCM. The LARG SCM information platform system has
many advantages. First, it proposes a simple model to facilitate the data interchange between
SC entities and within departments. Second, the languages used to model this information
system are easy to be understudied by the business agents. Other important advantage of this
system is that provides previously a static view of the system, the system requirements and the
core SCM business process. In the use case diagrams, all potential users have been identified
and the system has been modeled according to their necessity. It is noted that by having a
LARG SCM information system does not mean that the competitiveness of the chain is better, is
necessary an effective use of the system to get better results and performance improvement.
Information sharing through the use of Information Technology (IT) and collaboration are crucial
for effective supply chain management, but the simply use of IT applications is not itself enough
to realize the benefits of information sharing. With the LARG platform, it is possible to store data
to assist the decision-making in LARG ANP process.
Collaboration between entities in SC through the use of IT may be the key of success of SCs. In
automotive SC as is this case, there is one supplier per component, is no reason for competition
spirit, no collaboration and no sharing of information and knowledge.
In relation to the ANP, it proved to be a powerful decision-making method for prioritizing the
best factors in the LARG context and coping with vagueness and ambiguity of its elaborated
features and interrelatedness. The ANP approach developed in this research offers the ability to
prioritize enablers, KPIs, practices and paradigms in complex situations, helping to overcome
AHP limitations derived from ignoring feedbacks and inner dependencies. The main
disadvantages of ANP are the large number of pairwise comparisons needed and the
inconsistency problems. In this research, when the questionnaire was conducted some
inconsistency was present. The judgments had to be reviewed by the respondent to solve this
problem. After this review all matrix was consistency and the model computation was
conducted.
109
In the case study of Autoeuropa VW, used for exploratory demonstration purposes of the LARG
ANP model, according to the judgment of the focal firm professionals, ―Service level‖,
―Responsiveness to urgent deliveries‖, ―System for rapid response in case of emergencies,
problems or especial demands‖ and Agile have been advocated as the best elements, in each
of their respective clusters.
Future work will be necessary to expand validations and to include more than three practices
and KPIs. Also, is important to evaluate perceptions from various entities (first-tier suppliers and
distributors) within the supply chain and compare the results.
Finally, it would be interesting to develop and validate the model in the context of other
industries, such as aircraft manufacturing and ship construction/repair to compare those
findings with the ones reported here. An interesting future work is to find the calculation
formulas for each metric (KPI) and a calculation formulas for LARG index using the priorities of
LARG ANP model.
Other future work is to apply the axiomatic theory design to develop a framework design toolkit
for ICT-based platforms that deliver high levels of Business Interoperability that sustains product
design, development and production in an industrial context of lean, agile and green industrial
ecosystems.
110
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Annex
Annex
Annex 1 List of previous LARG practices identified
Annex 1.1 List of Lean practices
LEAN PRATICES
Geographical concentration
Just-in-Time
Outsourcing/Indigenous production
First tier - supplier - focal firm
Procurement consolidation
Profit sharing
Single sourcing and lean purchasing
Supplier certification
Supplier evaluation and rating
Supplier involvement in product development
Supplier relationship/long-term business relationship
Supplier training and development
supplier's in plant representative
To delivery materials directly to the point of use
To used EDI to share information
Built-in quality system
Cellular manufacturing
Concurrent engineering
Cycle/setup time reduction
Design for manufacturability
Frequent quick changeovers
High-involvement work systems
Innovative performance appraisal
JIT
Lot-size reduction
Focal Firm
Mass customization
Multifunctional workforce
Parts/work standardization
Postponement
Product modularity
Production Scheduling improvement
Pull flow control
The level production and scheduling
To use common parts
To use of bar coding and Radio Frequency Identification (RFID)
To used production planning and control technology (ERP)
Total productive maintenance
121
Annex
Total quality management

Use of standard or bar codec containers
WIP reduction
Cross-docking or compound delivery approach for great distances
First tier - Focal firm - Customer
Customer relationships
Delivery performance improvement
Demand stabilization
JIT
Milk run or circuit delivery for smaller distances
Order/shipment tracking/notice
To capture the demand of the customers in real time (POS)
To use third-party logistics for transportations
To used EDI to share information
Vendor Management Inventory (VMI)
122
Annex
Annex 1.2 List of Agile practices
LEAN PRATICES
First tier - supplier -
Use of IT to coordinate/integrate activities in design and development

Use of IT to coordinate/integrate activities in procurement
focal firm
Ability to change quantity of supplier's order

Ability to change delivery times of supplier's order
Speed in reducing development cycle time
First choice partner
Use of IT to coordinate/integrate activities in manufacturing
Integrated supply chain/value stream/virtual corporation
Centralized and collaborative e planning
Rapidly reconfigure the production process
Focal Firm
To produce in large or small batches

To accommodate changes in production mix
To reduce manufacturing throughput times to satisfy customer delivery
To reduce development cycle times
To minimize setups times and product changeovers
Organized along functional lines
Facilitate rapid decision making
Use of IT to coordinate/integrate activities in logistics and distribution
To alter deliver schedules to meet customer requirement

To increase frequencies of new product introductions
Speed in adjusting delivery capability
Speed in improving customer service
Speed in improving delivery reliability
Speed in improving responsiveness to changing market needs
Speed in increasing levels of product customization
To capture demand information immediately
Retain and grow customer relationships
Products with substantial added value for customers
123
Annex
Annex 1.3 List of Resilient practices
RESILIENT PRATICES
Sourcing strategies to allow switching of suppliers
First tier -
supplier -
focal firm
Committing to contracts for material supply (buying capacity whether it is used or not)
Flexible supply base/flexible sourcing
Developing visibility to a clear view of upstream inventories and supply conditions
Designing production systems that can accommodate multiple products and real-time changes
Multi-skilled workforce
Excess of capacity requirements
Postponement
Minimal batch sizes
Strategic stock
Focal Firm
Make-and-buy trade-off
Strategic disposition of additional capacity and/or inventory at potential "pinch points"
Developing visibility to a clear view production and purchasing schedules
Creating total supply chain visibility
Lead time reduction
Process and knowledge back-up
Supply chain risk management culture
Developing collaborative working across supply chains to help mitigating risk
First tier - Focal
firm - Customer
Maintaining a dedicated transit fleet

Flexible transportation
Silent product rollover
Developing visibility to a clear view of downstream inventories and demand conditions
Demand-based management
124
Annex
Annex 1.4 List of Green practices
GREEN PRATICES
Certification of suppliers' environmental management systems
Conducting joint planning to anticipate and resolve environment-related problems
Environmental collaboration with suppliers
Environmental monitoring upon suppliers
First tier - supplier - focal firm
Green procurement/sourcing
Prequalification of suppliers
Providing design specification to suppliers that include environmental requirements for purchased item
Source materials from environmentally/ethically sources
Suppliers' ISSO 14000 certification
To communicate to suppliers environmental and/or ethical criteria for goods and services
Second-tier supplier environmentally friendly practice evaluation
To encourage suppliers to take back packaging
To use green purchasing or logistics guideline
To use recyclable pallet to delivery materials
To work with product designers and suppliers to reduce and eliminate product environmental impacts
Working with industry peers to standardize requirements (for suppliers and purchasing items)
Applying life cycle assessment to conduct eco-reports
Better use of natural resources
Collaboration on products recycling with industry peers
Cross-functional cooperation for environmental improvements
Commitment of GSCM from senior managers
Design of products for reduced consumption of material and energy
Design of products to avoid or reduce use of hazardous of products and/or their manufacturing process
Energy efficiency measures for lighting
Environmental Management System (SEM)
Environmentally friendly raw materials
Filters and controls for emissions and discharges
Focal Firm
Green design (eco-design)

Green innovation
Green operations
Internal recycling of materials within the production phase
ISSO 14001 certification
Investment recovery (sale) of excess inventories/materials
Joining local recycling organizations
Recycling workplace materials (toners, paper, packing wastes, water, solid wastes)
Reduction in raw material (i.e. the use of recycled material) for product manufacturing
Risk prevention systems to cover possible environmental accidents and emergencies
Support for GSCM from mid-level managers
Sale of scrap and used materials
to decrease the consumption of hazardous/toxic materials
125
Annex
To design products for dis-assembly

To enhance environmental performance
To integrate total quality environmental management (TQEM) into planning and operation processes
To minimize waste
To reduce energy consumption
To reuse/recycling materials and packaging
To use life cycle assessment to reduce the products environmental burden
To use life cycle assessment for product design
To use standardized components to facilitate their reuse
Total quality environmental management
Cooperation with customer for eco-design
Cooperation with customers for cleaner production
Customers return our original packaging or pallet systems

Discuss changes in current packaging with the customers
Eco-labeling
Environmental collaboration with the customer
Environmental monitoring by the customer
Environmentally friendly packaging (green packaging)
Formal policy on green logistics/transport
Reverse logistics
To plan the vehicles routes to reduce environmental impacts
To use of environmentally-friendly transportation
To work with customers to change product specifications
126
Annex
Annex 2 Examples of questionnaires used in gathering data
Annex 2.1 Questionnaire of pairwise comparison of Criteria elements (enablers)

according to SC competitiveness
Questionnaire 1 (comparison enablers/SC competitiveness)
This questionnaire has as objective assist a research that intend to study and compare a set of
Criteria/enablers (Cost, Service Level, Time, and Quality of Product) aiming automotive SC
competitiveness.
Your contribution is very important to development of this research. Please accept contribute by
completing this questionnaire.
A - Enterprise characterization
1.0 Enterprise name: Volkswagen Autoeuropa
1.1 Country: Portugal
1.2 Business sector:
1.3 Number of employees:
1.4 Main product manufactured: Automobile (car)
1.5 Main customer (s) activities:
1.6 Position of person that complete this questionnaire: Logistics department
responsible
1.7 Name of person that complete this questionnaire (optional):
1.8 Contact (e-mail):
1.9 How is positioned your firm in the automotive SC?
Fornecedor Fornecedor Fornecedor Fornecedor Empresa Cliente Cliente

de 4ª linha de 3ª linha de 2ª linha de 1ª linha Focal de 1ª de 2ª
(Montadora) linha linha
☐ ☐ ☐ ☐ ☒ ☐ ☐
127
Annex
B – Comparison of Criteria (enablers) according to SC competitiveness
Compare the criteria listed below, according to competitiveness of automobile SC.
B1 Which criteria is more important to competitiveness of automobile SC?
Cost ☐
Service Level ☐
B1.1 Evaluate the degree of importance of the most important criteria for the least:
Equal Moderate Strong Very strong Extremely

1 2 3 4 5 6 7 8 9
☐ ☐ ☐ ☐ ☐ ☐ ☐ ☐ ☐
Cost ☐
Time ☐

1 2 3 4 5 6 7 8 9
☐ ☐ ☐ ☐ ☐ ☐ ☐ ☐ ☐
Cost ☐
Quality of Product ☐

1 2 3 4 5 6 7 8 9
☐ ☐ ☐ ☐ ☐ ☐ ☐ ☐ ☐
128
Annex
Service level ☐
Time ☐

1 2 3 4 5 6 7 8 9
☐ ☐ ☐ ☐ ☐ ☐ ☐ ☐ ☐
Service Level ☐
Quality of product ☐

1 2 3 4 5 6 7 8 9
☐ ☐ ☐ ☐ ☐ ☐ ☐ ☐ ☐
Time ☐
Quality of product ☐

1 2 3 4 5 6 7 8 9
☐ ☐ ☐ ☐ ☐ ☐ ☐ ☐ ☐
Total: 6 (Questions)
129
Annex
130
Annex
Annex 2.2 Questionnaire of pairwise comparison of LARG practices

according to paradigms
Questionnaire 2 (LARG practices/paradigms)
This questionnaire has as objective assist a research that intend to study and compare a set of
LARG practices, according to four management paradigms (Lean, Agile, Resilient, and Green),
in perspective of automotive SC.
responsible

☐ ☐ ☐ ☐ ☒ ☐ ☐
131
Annex
B – Comparison of LARG practices according to Lean paradigm
Compare the practices listed, according to Lean paradigm (in perspective of automobile SC).
B1 Which practice is more important according to Lean paradigm?
Strategic stock ☐
System of rapid response in cases of emergencies and exceptional ☐
demands
B1.1 Evaluate the degree of importance of the most important practice for the least:

1 2 3 4 5 6 7 8 9
☐ ☐ ☐ ☐ ☐ ☐ ☐ ☐ ☐
Strategic stock ☐
Reuse materials and packages ☐

1 2 3 4 5 6 7 8 9
☐ ☐ ☐ ☐ ☐ ☐ ☐ ☐ ☐

demands

1 2 3 4 5 6 7 8 9
☐ ☐ ☐ ☐ ☐ ☐ ☐ ☐ ☐
Sub-total: 3 (Questions)
132
Annex
C – Comparison of LARG practices according to Agile paradigm
Compare the practices listed, according to Agile paradigm (in perspective of automobile SC).
B1 Which practice is more important according to Agile paradigm?
Strategic stock ☐
demands

1 2 3 4 5 6 7 8 9
☐ ☐ ☐ ☐ ☐ ☐ ☐ ☐ ☐
Strategic stock ☐

1 2 3 4 5 6 7 8 9
☐ ☐ ☐ ☐ ☐ ☐ ☐ ☐ ☐

demands

1 2 3 4 5 6 7 8 9
☐ ☐ ☐ ☐ ☐ ☐ ☐ ☐ ☐
133
Annex
D – Comparison of LARG practices according to Resilient paradigm
Compare the practices listed, according to Resilient paradigm (in perspective of automobile
SC).
B1 Which practice is more important according to Resilient paradigm?
Strategic stock ☐
demands

1 2 3 4 5 6 7 8 9
☐ ☐ ☐ ☐ ☐ ☐ ☐ ☐ ☐
Strategic stock ☐

1 2 3 4 5 6 7 8 9
☐ ☐ ☐ ☐ ☐ ☐ ☐ ☐ ☐

demands

1 2 3 4 5 6 7 8 9
☐ ☐ ☐ ☐ ☐ ☐ ☐ ☐ ☐
134
Annex
E – Comparison of LARG practices according to Green paradigm
Compare the practices listed, according to Green paradigm (in perspective of automobile SC).
B1 Which practice is more important according to Green paradigm?
Strategic stock ☐
demands

1 2 3 4 5 6 7 8 9
☐ ☐ ☐ ☐ ☐ ☐ ☐ ☐ ☐
Strategic stock ☐

1 2 3 4 5 6 7 8 9
☐ ☐ ☐ ☐ ☐ ☐ ☐ ☐ ☐

demands

1 2 3 4 5 6 7 8 9
☐ ☐ ☐ ☐ ☐ ☐ ☐ ☐ ☐
135
Annex
136
Annex
Annex 2.3 Questionnaire of pairwise comparison of LARG practices

according to Focal firm
Questionnaire 3 (LARG practices/entities)
This questionnaire has as objective assist a research that intends to study and compare a set of
LARG practices, according to each entity level in the automotive SC chain.
responsible

☐ ☐ ☐ ☐ ☒ ☐ ☐
137
Annex
B – Comparison of LARG practices according to Focal firm
Compare the practices listed, according to Focal firm (in perspective of automobile SC).
B1 Which practice is more important to focal firm, in perspective of focal firm?
Strategic stock ☐
demands

1 2 3 4 5 6 7 8 9
☐ ☐ ☐ ☐ ☐ ☐ ☐ ☐ ☐
Strategic stock ☐

1 2 3 4 5 6 7 8 9
☐ ☐ ☐ ☐ ☐ ☐ ☐ ☐ ☐

demands

1 2 3 4 5 6 7 8 9
☐ ☐ ☐ ☐ ☐ ☐ ☐ ☐ ☐
138
Annex
Annex 2.4 Questionnaire of pairwise comparison of paradigms (Lean,

Agile, Resilient, and Green) according to Focal firm
Questionnaire 4 (LARG paradigms/entities)
This questionnaire has as objective assist a research that intends to study and compare a set of
management paradigms (Lean, Agile, Resilient, and Green), according to each entity level in
the automotive SC chain.
responsible

☐ ☐ ☐ ☐ ☒ ☐ ☐
139
Annex
B – Comparison of LARG paradigms according to Focal firm
Compare the paradigms listed, according to Focal firm (in perspective of automobile SC).
B1 Which paradigm is more important to focal firm, in perspective of focal firm?
Lean ☐
Agile ☐
B1.1 Evaluate the degree of importance of the most important paradigm for the least:

1 2 3 4 5 6 7 8 9
☐ ☐ ☐ ☐ ☐ ☐ ☐ ☐ ☐
Lean ☐
Resilient ☐

1 2 3 4 5 6 7 8 9
☐ ☐ ☐ ☐ ☐ ☐ ☐ ☐ ☐
Lean ☐
Green ☐
B3. Evaluate the degree of importance of the most important paradigm for the least:

1 2 3 4 5 6 7 8 9
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Annex
Agile ☐
Resilient ☐

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☐ ☐ ☐ ☐ ☐ ☐ ☐ ☐ ☐
Agile ☐
Green ☐

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☐ ☐ ☐ ☐ ☐ ☐ ☐ ☐ ☐
Resilient ☐
Green ☐
B3. Evaluate the degree of importance of the most important paradigm for the least:

1 2 3 4 5 6 7 8 9
☐ ☐ ☐ ☐ ☐ ☐ ☐ ☐ ☐
141
Annex
142

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An Information Model for Lean, Agile, Resilient and

Green Supply Chain Management

Izunildo Fernandes Cabral

Dissertação para a obtenção de Grau de Mestre em Engenharia e Gestão

Orientador: Professor Doutor António Bárbara Grilo

Presidente: Professor Doutor Virgílio Cruz Machado

A Faculdade de Ciências e Tecnologia e a Universidade Nova de Lisboa têm o direito, perpétuo

LARG Lean, Agile, Resilient, and Green

ANP Analytical Network Process

LARG SC Lean, Agile, Resilient, and Green Supply Chain

KPI Key Performance Indicators

BPD Business Process Diagram

MIT Massachusetts Institute of Technology

EDAM Engineering Design and Advanced Manufacturing

BPMN Business Process Modeling Notation

UML Unified Modeling Language

NVA Non-Value Added

TPS Toyota Production System

1.3 Research Methodology

Performance Indicators (KPIs) to measures the influences of LARG practices implementation;

Literature review on Lean, Agile, Resilient and Green SCM

Literature review on techniques for information system modeling

Literature review on models for decision making

Selection and linking of practices and KPIs

LARG Information system modeling

Development of ANP model to select best LARG practices and KPIs

Figure 1.1 Research methodology.

1.4 Research contribution of this dissertation

1.5 Structure of the dissertation

Chapter 2 Supply Chain Management (SCM)

2.1 SCM characterization on Lean, Agile, Resilient and Green

According to (Motwani, 2003), LM is an enhancement of mass production. Getting the product

2.1.2 The Agile Paradigm

Decrease in manufacturing costs, increased customer satisfaction, removal of non-value added

2.1.3 The Resilient Paradigm

 To reduce the effectiveness of the disturbance by changing the level of the

The ability to recover from the disturbance occurrence is related to development of

2.1.4 The Green Paradigm

Figure 2.1 Green supply chain (Olugu, Wong, & Shaharoun).

2.1.5 Lean, agile, resilient and green paradigms comparison

Driver Lean Agile Resilient Green

Has the ability to

May participate in Supply chain Inter-organizational

Approach to Supplier attributes Supplier attributes

Reduce transportation lead

Eco-design and incorporation

 Lean – cost reduction and elimination of waste.

 Resilient – capacity to respond to unexpected disruption.

2.2 Lean, Agile, Resilient and Green SCM Practices

2.2.1 Lean practices

Table 2.2 Lean SCM practices.

Lean SCM practices

Milk run or circuit delivery for smaller distances

To use third-party logistics for transportations

Just in time (JIT) (focal firm → first tier customer)

Pull flow control

Total quality management (TQM)

Supplier relationships/long-term business relationship

Just in time (JIT) (first tier supplier → focal firm)

Just in sequence (JIS) (first tier supplier → focal firm)

Delivery materials directly to the point of use

Single sourcing and lean purchasing

2.2.2 Agile practices